Chandrababu discusses crop loan waiver issue with RBI Guv

Explains to Rajan circumstances under which TDP had promised waiver as the farm sector was worst hit due to vagaries of nature

Andhra Pradesh Chief Minister N Chandrababu Naidu today spoke to Reserve Bank Governor Raghuram Rajan over phone and discussed the crop loan waiver issue in the backdrop of reports that the RBI was opposing it.

Chandrababu reportedly explained to Rajan the circumstances in which the TDP had promised waiver of crop loans as the agriculture sector was the worst hit due to vagaries of nature in the state during the last decade.

"There were a series of natural calamities like floods, cyclones, unseasonal rains and drought that left farmers in worst misery. Farmers are in deep distress and hence, moved by their plight, I promised loan waiver during my foot march in late 2012," Chandrababu reportedly told Rajan.

The AP government constituted an expert committee to work out modalities for implementation of the scheme. The committee would submit its preliminary report by June 22, he said.

The Chief Minister also requested RBI to lend a helping hand to pull the farmers out of distress.

Chandrababu is scheduled to discuss the loan waiver issue with bankers here later in the day.

Last week, RBI executive director D P Joshi reportedly wrote to the AP government opposing the loan waiver scheme saying it would destroy the financial health of the banks. This would in turn lead to economic instability, he had cautioned.

Following the letter, the Chief Minister spoke to the RBI Governor over phone to discuss the issue, sources in the Chief Minister's Office said.

Chandrababu, who will visit New Delhi on June 25 and 26, will take up the issue with Prime Minister Narendra Modi and Union Finance Minister Arun Jaitley as well, the sources added.