The big-bang farm loan relief announced in the UPA government’s election year budget just got bigger. The government on Friday said it would waive farm loans to the tune of Rs 71,680 crore, nearly 20 per cent more than the Rs 60,000 crore of relief announced in the budget.
Instead of the earlier estimate of 3 crore small farmers, full waiver would now accrue to nearly 3.7 crore of them. And the number of farmers, who would have to reschedule most of their loans is now estimated at 60 lakhs, down the earlier estimate of 1 crore.
“The government is taking over the debt of our farmers and reimbursing the banks,” Finance Minister P. Chidambaram said after a Cabinet meeting that cleared the package.
Farmers would not have to submit any documents. Instead they will receive a certificate from the bank with the details of loan waiver.
Under this scheme, small and marginal farmers with a land holding of less than two hectares can have their entire bank loan outstanding till March 2007 waived off. Farmers with a holding of over two hectares will be eligible for a one-time settlement rebate of 25 per cent of their outstanding loans subject to the condition that the balance 75 per cent is paid in three installments by June 30, 2009. No interest will be charged on the outstanding amount.
The government has also identified 237 districts where productivity is low as these are in desert and drought-prone areas. Farmers here would still be eligible for a minimum loan relief of Rs 20,000 even if their land-holding was above two hectares. Chidambaram said all direct agricultural loans, including crop loans and investment credit for agriculture and allied activities including tractor loans given to farmers between March 1997 and March 2007 (which are unpaid till February 2008) will be covered.