Loan waiver to benefit 4 mn Rajasthan farmers, cost state Rs 18,000-cr
The loan waiver decision of the Ashok Gehlot government will benefit around 4 million farmers, including 1.2 million who have taken loans from commercial banks, of Rajasthan, and cost the state Rs 18,000 crore, officials said.
Hours after assuming office as chief minister of Rajasthan, Gehlot made the waiver announcement on Wednesday night. In the run-up to the state assembly elections, Congress president Rahul Gandhi had promised farm loan waivers in Madhya Pradesh, Chhattisgarh and Rajasthan within 10 days of the Congress coming to power.
In Rajasthan, there are around 7 million farmers, of which 5.5 million have taken farm loans under various schemes to the tune of Rs 94,000 crore, including long- and short-term loans.
An official of the cooperative department said as per the announcement by the government, total outstanding short-term loan till November 30, 2018 from Central Cooperative Banks (CCBS) has been waived, benefitting around 2.8 million. This will cost the state exchequer Rs 10,000 crore.
In addition, short-term loans till November 30, 2018 and up to Rs 2 lakh has been waived of the defaulters, who have taken loan from scheduled, nationalised or regional rural banks. This will benefit around 1.2 million farmers. Defaulters are those who are not able to pay their instalments. This will cost the state exchequer Rs 8,000 crore.
He added there are around 25 scheduled and nationalised banks and 12 regional rural banks from which the farmers have taken loan.
The official reiterated that for cooperative loans, there is complete waiver on the outstanding, and for the second category dealing with defaulters who have taken loan from other banks, the planning department will make guidelines.
Sources in the government claimed that the benefit of the loan waiver decision will start coming after budget, which is usually brought in February. The government will make a provision in the budget for the loan waiver as it would bring a huge burden on the state exchequer.
In the present budget, the government has an annual borrowing capacity of Rs 36,000 crore, of which the state has already taken loan of more than Rs 25,000 crore. As per the RBI guidelines, states can borrow up to 3% of their GDP.
Looking to the present financial situation, the government has less scope to borrow money and therefore has to wait till the next budget.
In February 2018, former chief minister Vasundhara Raje had announced a one-time loan waiver of up to Rs 50,000 for small and marginal farmers in the state with the financial implication of Rs 8,000 crore. The government provided Rs 2,000 crore for this to the cooperative department and asked it to borrow the remaining Rs 6,000 from market. The Apex Cooperative Banks borrowed Rs 5,000 crore from the National Cooperative Development Corporation (NDCC), of which the government was the guarantor.
The previous government’s decision was aimed at benefitting around 2.8 million farmers but it is still not executed completely, said an officer of the cooperative department. The state government, since April 1, 2018 has distributed new short-term loans of around Rs 11,000 crore to farmers, he added.
Financial experts say such decisions in the long term will not be in the interest of the country. Associate professor SS Somra, head of economics department of University of Rajasthan, said this type of loan waiving process is not productive for the economy – in long term will leave negative impact. “These are political decisions but in long term not in the country’s interest,” he said. Somra added that no doubt those who will be benefitted by such schemes may be happy but who are sincerely paying the loan amount may get disappointed.
Rajasthan Kissan Sabha general secretary Tara Singh said, “The decision is welcoming and we hope that all the farmers are covered under it, none is left behind.”
BJP spokesperson Mukesh Pareek said the step of waiving off farm loan up to Rs 2 lakh is welcome but it would be better if the Congress government clarifies what financial arrangements it has made. “The move is welcoming if they successfully can do or it’s a mere an announcement,” he said.