 "Andhra govt exploring other options on farm loan recast")
State Agriculture Minister P Pulla Rao said, “It (RBI) had earlier hinted it would consider our request only for loans taken up to October 31 last year.” He added the government would soon implement a loan waiver programme, as decided by the state Cabinet.
The minister’s statement followed RBI saying there was no case to restructure crop loans in the state, as yields in areas declared calamity-hit pointed to a different story.
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So far, the government had considered loan recast as an alternative to the difficult and expensive process of loan waiver, which it had promised ahead of the general elections.
The alternative to the loan recast will mean depositing the money directly into the accounts of borrowers. Pulla Rao didn’t elaborate on how the government planned to do this.
A former banker who worked on the modalities of the state government’s loan waiver programme told Business Standard, “If RBI refuses to recast the loans, the only alternative is to clear the loans of borrowers and take money from the government at a later date, as promised.” He added if the borrowers didn’t repay the loans, they might have to pay interest on the overdue, as these loans wouldn’t get interest subvention and might surpass the loan waiver cap of Rs 1.5 lakh a family, as fixed by the state government.
Earlier, RBI had told state government officials in case it considered restructuring the loans, it would extend the facility only to crop loans given during the previous kharif season, adding it was against gold loans taken in the name of agricultural credit.
A state-level committee of bankers had set a target of disbursing Rs 41,978 crore of short-term agriculture loans during the kharif and rabi seasons this year, against Rs 37,058 crore the last agricultural year. Of this year’s crop loan target, Rs 25,885 crore is for the kharif season. Bankers say it is unlikely these targets will be met.
State Finance Minister Yanamala Ramakrishnudu told Business Standard even if RBI decided to recast the loans on its terms, not much relief was likely. He added only loans amounting to about Rs 10,000 crore would get relief.
“There were places in a particular district where normal-to-higher crop production was achieved, but that cannot be taken as a representative sample for several other locations where the crop was damaged by floods, cyclones and drought. All we asked was to relax a particular norm that mandated the government to report the calamity within a specified time from the date of declaration of calamity-affected mandals. The previous government did not do it; maybe because it was preoccupied with the issue of bifurcation,” Ramakrishnudu said.
The YSR Congress has already held protest rallies against the delay in implementing the loan waiver programme.
On Monday, Chief Secretary I Y R Krishna Rao had written to RBI, urging the central bank to heed the state’s request in this regard.
Sources said preparations for implementing the loan waiver hadn’t progressed. The state cabinet’s resolution regarding the loan waiver scheme is yet to reach various departments. Also, the government hasn’t constituted a resource mobilisation committee to implement the loan waiver programme yet. Officials said member of Parliament Y S Chowdary and former Canara Bank chairman and managing director M B N Rao were being considered for inclusion in the panel.
- RBI had stated there was no case to restructure crop loans in the state, as yields in areas declared calamity-hit pointed to a different story
- So far, the state government had considered loan recast as an alternative to the difficult and expensive process of loan waiver
- The alternative to the loan recast will mean depositing the money directly into the accounts of borrowers