KCR adds fresh condition to farm loan waiver

To waive loans disbursed only during 2013-14

Telangana chief minister K Chandrasekhara Rao (KCR) on Wednesday made it clear to bankers that his government would waive the crop loans only disbursed during the 2013-14 agriculture season.

This added condition to the ruling Telangana Rashtra Samithi (TRS)’s election promise of waiving all crop loans in the Rs 1-lakh bracket is a clear sign of the government’s intent that it would want to minimise the burden on the state exchequer.

The government made it clear the loan waiver scheme would not be extended to any other type of loans, including gold loans, even if taken for the purpose of agriculture during the same period or in the past. The chief minister asked the bankers to get back with final figures by Monday to finalise the action plan.

Giving the details of the State-level Bankers’ Committee (SLBC) meeting convened for this purpose, finance minister Etela Rajender said the government had asked the bankers to get back with the data of the crop loans disbursed last year. Going by the fresh guidelines, the total liability from the loan waiver would be up to Rs 12,000 crore, according to him.

He said while the loans exceeding the Rs 1 lakh limit by Rs 10,000 to Rs 20,000 could be included in the scheme, loans of the size of Rs 1.5 lakh would not be reimbursed by the government.

According to the data available with the government, the net crop loan disbursals in the Rs 1-lakh bracket during 2013-14 stood at Rs 14,897 crore as against Rs 30,120-crore total crop loan outstandings during the period.

The figure was further brought down to Rs 7,840 crore following elimination of gold loans (Rs 2,700 crore), post harvesting loans (Rs 500 crore) and loans given to sugarcane and tobacco growers (Rs 500 crore), almost one-third of the total size of the Rs 1-lakh bracket loan outstandings.

Telangana would be the first state in the country to waive farm loans given by all types of banks. The Tamil Nadu government had announced a similar debt waiver scheme amounting to Rs 7,000 crore in 2006 while extending it only to the loans disbursed by the state cooperative sector banks.

The Tamil Nadu government had reimbursed the entire debt in three installments at 8 per cent rate of interest after the Reserve Bank of India stipulated the condition that the state government should make a financial provision in the state budget towards the annual installments.

The Government of India, however, implemented loan waiver across cooperatives as well as commercial banks first in 1989 and later in 2008.

The chief minister-in-waiting of residual Andhra Pradesh N Chandrababu Naidu has also made a similar promise in the recently concluded elections but without mentioning any upper limit, timeframe or the nature of loans.

For instance, the Telugu Desam (TDP) cadres erected the hoardings in several Seemandhra districts during the elections asking the voters to elect Naidu if they wanted their gold jewellery back from bank mortgage. Gold loans taken for agriculture purpose stood at Rs 20,102 crore in the 13 districts of Seemandhra compared with just Rs 3,800 crore in 10 districts of Telangana.