Doubts over Maha Rs11,000-cr crop loan repayment claim

  • Kunal Purohit, Hindustan Times
  • Updated: Apr 28, 2016 01:22 IST
Restructuring means converting short-term one-year loans to medium-term loans, where the repayment duration is extended to five years.  (HT File)

Mumbai: A day after the state government said it would give drought-hit farmers more time to repay crop loans, cracks are already emerging about how the government will restructure loans worth Rs11,000 crore.

Restructuring means converting short-term one-year loans to medium-term loans, where the repayment duration is extended to five years. 

While political parties and agricultural experts welcomed the move, doubts persist about how it will be implemented, and several experts have pointed to how the figures could be exaggerated. 

On Tuesday, the state cabinet approved restructuring crop loans worth Rs10,941 crore in the 26,670 drought-hit villages across the state. The move was meant to ensure farmers get more time to clear debt and are still eligible to get fresh credit this year. Of the total amount, the government estimated last year’s crop loans alone would be worth Rs5,000 crore while another Rs3,503 crore of loans from the 2014 Kharif sowing season will also be restructured. 

In addition, the government has decided to ask for the Reserve Bank of India permission to restructure Rs2,438 crore worth of outstanding loans that have been taken by 4.4 lakh farmer from these villages in 2012-13 and 2013-14.

But these figures are contentious.

To begin with, the government does not have an exact figure of how much crop loans farmers in these drought-hit villages took in the Kharif sowing season last year. Cooperative minister Chandrakant Patil admitted to this, saying the Rs5,000 crore was only an estimate.

The Congress has pointed out how the government had, last year itself, issued a Government Resolution (GR) restructuring 2014’s crop loans worth Rs3,503 crore. Announcing it afresh, the party claimed, was just the government’s way of repackaging a decision and claiming credit for it afresh. 

 “The other problem with restructuring 2014’s loans is more than 50% of the farmers had already repaid loans last year, when the decision was taken. The government promised to give them the benefit last year, but this hasn’t happened so far,” said Congress spokesperson Sachin Sawant. 

Another point of contention is the government’s plan to restructure Rs2,438 crore worth of loans from 2012-13 and 2013-14. The problem with this plan, critics say, is it will require the Reserve Bank of India’s permission, and the government has yet to send a proposal. 

 Beyond the politics of it, there are doubts over just how beneficial the move will be for the farmer.

Leading farm activist Vijay Jawandia said the move, though welcome, may backfire.

“By restructuring loans from 2014 and 2015, what might happen is the farmer will, next year, suddenly have an avalanche of loan repayment to make. This might not be such a desirable situation,” he said. There are serious doubts over whether banks, at the ground level, would pay heed to the government’s instructions, Jawandia said. 

 Agriculture researcher Ajay Dandekar said the move was welcome, but half-hearted.

“Ideally, the government should have waived off loans completely and looked at pricing of farm products. Unless the farmer gets the right price for his produce, how is he ever going to be in a position to pay these loans back?”

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