Maharashtra waives ₹34,022-crore farm loans, 89 lakh farmers to benefit | mumbai news | Hindustan Times
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Maharashtra waives ₹34,022-crore farm loans, 89 lakh farmers to benefit

Mumbai city news: Chief minister Devendra Fadnavis said the loan waiver was the “highest by any state in India’s history”

mumbai Updated: Jun 25, 2017 00:46 IST
Surendra P Gangan
(HT File)

The Maharashtra government on Saturday announced it would spend Rs34,022 crore to write off farm loans, a decision that would help 89 lakh farmers in debt across the state.

The loan waiver, which chief minister Devendra Fadnavis said was the “highest by any state in India’s history”, will cover 65% of all farmers in Maharashtra. Of this, the loans of 40 lakh farmers will be completely written off. The state announced the waiver a month ahead of the July 25 deadline set by farmers’ outfits. The decision was made at an unscheduled cabinet meeting called by Fadnavis on Saturday.

The write-off came with conditions — a cap of Rs1.50 lakh per farmer, and only farmers who took loans before June 30, 2016, are eligible. The government said despite these conditions, 40 lakh farmers will not have to make any payments at all, while 6 lakh farmers can avail of a scheme that lets them make a one-time settlement of up to Rs1.50 lakh. The government also announced an incentive for those farmers who paid back loans regularly, giving them a bonus of Rs25,000 or 25% of the loan repaid — whichever was higher. Fadnavis said, “This was a historic decision as no other state has given such a large waiver. Andhra Pradesh waived loans up to Rs20,000 crore, Punjab allotted Rs10,000 crore, Telangana announced a Rs15,000 crore, Karnataka announced an Rs8,000-crore waiver.”

Farmers’ outfits, however, were not happy with the package, as they have been against the Rs1.50-lakh cap and the June 2016 deadline. “We have been demanding a complete waiver without any conditions. The government has backtracked on the promise it made us,” said Raghunath Patil of the Shetkari Sanghatana. A steering committee of farmers said they will meet today to decide what next.

Justifying the cap on the maximum amount, Fadnavis said the outstanding loans per farmer in states such as Kerala, Punjab and Andhra Pradesh were Rs 2.13 lakh, Rs 1.19 lakh and Rs 1.23 lakh, it was Rs54,700 in Maharashtra.

The specifics of the waiver were decided after hectic rounds of discussions with ruling ally Shiv Sena’s chief Uddhav Thackeray, key opposition leaders, including the Nationalist Congress Party chief Sharad Pawar, state Congress chief Ashok Chavan and Swabhimani Paksha chief Raju Shetti over the past two days.

Fadnavis said the government had succeeded in arriving at a consensus. “I think the farmers will be satisfied with the package. They will not stand by disgruntled leaders, even if a call to agitate comes after this,” he said.

READ: Maharashtra farm loan waiver: Bad economics or good politics?

Although Thackeray insisted the upper cap be raised to Rs2 lakh, the ruling party settled it at Rs 1.5 lakh. The government earlier wanted to cap the waiver at Rs 1 lakh per farmer, but after severe opposition by farmers’ outfits and opposition parties, a ministerial group under revenue minister Chandrakant Patil worked out a proposal.

Sena minister Diwakar Raote, who is also the state transport minister, said, “The Sena is happy that its demand (for a waiver) has been met. The CM has taken an important decision by giving relief to 89 lakh farmers. He consulted with Sena chief Thackeray because he had made the demand.” Raote added that the government will last its full term of five years.

The waiver has been named after the Maratha king — Chhatrapati Shivaji Maharaj Krishi Sanman Yojana. The state said the package won’t apply to government and semi-government employees (except Class-4 employees), sitting and former legislators, elected representatives to civic and district bodies, income-tax payers, and farmers and traders with an annual turnover of more than Rs10 lakh.

The waiver will add to the state’s financial burden, and this could affect development projects, CM Fadnavis admitted, but said the government will tie-up with banks for a staggered repayment of their loans. “We are talking to the nationalised banks on how to schedule the repayment of loans that we take . It is true the government is not in a position to bear the additional burden, but our endeavour is to keep fiscal deficit in check,” he said.

Fadnavis said the government will try ensure development projects are not affected. The state government, while giving repayment guarantee to banks, has planned to stagger the amount over the next four years. “By staggering the burden over four years, the annual burden on the state exchequer will be Rs 8000 crore in first year. We have been tapping options of resource mobilisation. One of them is a state finance corporation, where fixed deposits will be parked with various government agencies and corporations such as Mhada, MMRDA and municipal corporations,” said revenue minister Chandrakant Patil, who headed the high-powered group of ministers.

State Congress chief Ashok Chavan said the decision was taken only after the Congress pursued the demand of a waiver. “We are not fully satisfied with the announcement. We wanted a blanket waiver without any upper cap and we stand by our demand,” he said.

Widespread protests by farmers across the state earlier this month forced the government to finally decide about waiving the loans. The government had several rounds of discussion with a steering committee of farmers’ outfits.

According to sources, the government decided to advance the announcement to avoid further pressure on farmers after June 30. “The financial cycle for repayment of agriculture loans ends on June 30 every year. By announcing the waiver a week ahead of this date, we have given an opportunity to farmers to clear the remaining loans. Also, had we delayed the decision further, the number of defaulters would have increased. It would also have become difficult to arrive at a consensus,” a minister privy to the developments said. Other sources said the government did not want to wait for another sowing cycle, as this would have increased the amount of loan waiver. Further, with farmers’ outfits and opposition parties staging agitations, the repayment of farm loans had almost stopped, which meant few farmers would have got loans for the current sowing season. “It would have further fuelled resentment among farmers,” a senior minister said, requesting not to be named.

Ajit Nawale, convenor of the farmers’ committee, said, “A large number of farmers will be out of the coverage of the package. All members of the steering committee are meeting on Sunday to deliberate. The decision whether to resume the agitation will be taken tomorrow.”

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