Mahayuti government proposes loan waiver for farmers' co-ops ahead of polls

The cooperation department has moved to write off ₹171 crore in long-standing debts owed by farmers' societies

Mumbai: As the assembly elections draw near, the Maharashtra government has put forward another proposal to waive outstanding loans given to farmers' cooperative societies across various districts, with a particular focus on the sugarcane-growing region of western Maharashtra. The cooperation department has moved to write off ₹171 crore in long-standing debts owed by farmers' societies.

The initiative stems from the proliferation of cooperative sugar mills in the state during the 1970s and 1980s. (REPRESENTATIVE PHOTO)

The initiative stems from the proliferation of cooperative sugar mills in the state during the 1970s and 1980s. Farmers in western Maharashtra's sugar belt formed cooperative societies to efficiently utilise water from dams and canals. These societies established lift irrigation mechanisms to distribute water from irrigation projects implemented on a cooperative basis.

To foster this movement, the societies received financial aid of up to ₹1 crore or 25% of the total cost incurred for their lift irrigation projects. The societies were expected to secure the remaining capital as loans from district cooperative banks.

Out of 2,659 such societies across the state, 240 have been unable to repay their loans, amounting to ₹171 crore. The cooperative department, led by Dilip Walse Patil of the Ajit Pawar-led Nationalist Congress Party (NCP), has proposed writing off these societies' loans.

An official from the cooperation department stated, "We have moved the proposal and expect it to be tabled before the cabinet soon. We have proposed to pay the principal amount of the loan, requesting the district banks to waive the interest and penalty. The banks have agreed to it."

Of the 240 societies in question, 97 are operational, while 67 have had their registrations cancelled due to poor financial conditions, and 51 have gone into liquidation, the official added.

However, the official noted that due to the unavailability of funds, as the government is diverting the budget to the Ladki Bahin Yojana (Girl Child Scheme), the proposal is expected to be held back by the government.

This move comes as part of a series of measures aimed at alleviating financial burdens on the agricultural sector in the run-up to the elections. Critics argue that such waivers, while providing short-term relief, may not address the underlying structural issues facing the state's agricultural cooperatives.

The proposed waiver highlights the ongoing challenges in Maharashtra's cooperative sector, particularly in regions dominated by sugarcane cultivation. As the election approaches, the government's handling of this issue could have significant implications for rural voters in these key agricultural districts.