Loan waiver in two months: How MVA did it

The Uddhav Thackeray-led Maharashtra Vikas Aghadi (MVA) government may not have much to show in its first 100 days in power on March 6, but it does get credit for

The Uddhav Thackeray-led Maharashtra Vikas Aghadi (MVA) government may not have much to show in its first 100 days in power on March 6, but it does get credit for designing and rolling out a loan waiver scheme for small farmers in just two months.

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The Thackeray government announced the Mahatma Jyotirao Phule Farmer Loan Waiver scheme on December 21, 2019, last day of the winter session of the state legislature.

The scheme promised to write off loans with an outstanding of up to ₹2 lakh for farmers from April 1, 2015 to September 30, 2019.

On February 24, less than two months after the announcement, the waiver was rolled out, with the first list of 15,358 beneficiaries.

On the back of a rather long-winded and muddled loan waiver announced by the former Devendra Fadnavis-led government that continues to get disbursed till date (nearly three years after it was announced), this government seems to have scored with the way it is implementing this waiver.

What went right?

Senior officials from the state secretariat told HT that besides learning from the past experience, a single administrative and political command to design the scheme and the use of National Payments Corporation of India (NPCI) as a payment interface to electronically transfer high volume loan amounts directly to loan accounts made all the difference.

“The loan waiver scheme was discussed and planned even before the entire cabinet got sworn in. The chief minister was very clear that there should be no glitches like in the last waiver and he gave a free hand to the co-operation department to design and roll out the scheme. After that, he refused to entertain any changes in the format of the waiver, although several such political demands were made,” said a senior bureaucrat, associated with the waiver.

He pointed out that last time, the original government order for waiver was amended nearly 20 times as additions, exemptions continued to be made towards beneficiaries, formats, parameters.

In the current scheme, the government also kept its ambit limited.

It prepared a list of 34.83 lakh beneficiary farmers as per the parameters eligible to get a waiver of around ₹29,000 crore. The last government had first announced a scheme for 89 lakh farmers and a loan waiver of up to ₹34 lakh crore.

Nearly three years down the line, so far, 18 lakh farmer accounts have got waiver under this scheme and around ₹18,000 crore has been waived.

(This does not include one-time settlement payments and incentive of ₹25,000 given to farmers, who paid off loans on time).

“This time, we also used NCPI and National Automated Clearing House (NACH), a web-based payment solution that allowed us to directly transfer from a pool account under registrar of co-operatives to loan accounts of farmers. Last time, the money was transferred through four tiers and went from us to banks, the different branches and finally the loan accounts,” said Abha Shukla, principal secretary, co-operation department, who designed this scheme.

She got her posting as co-operation secretary midway through the last loan waiver. She does admit that the last waiver ran through rough weather due to range of factors, including initial premise that the bank accounts were linked to Aadhaar and then realising only 30 per cent of accounts were Aadhar linked.

Shukla pointed out that despite this, in this waiver, she had insisted on keeping the Aadhaar authentication as an essential element to ensure the benefit went in the right hands. This time round, the authentication is being done by farmers, who along with district-level officials have been given clear instructions on how to get this done through as 92,000 biometric sensors after the loan eligibility lists are released by banks.

Leader of Opposition and former CM Devendra Fadnavis, however, slammed the loan waiver.

“Not more than 15 to 20 per cent farmers are eligible for this waiver. This is a loan waiver that cheats farmers. This government had promised a complete loan waiver. Farmers will also not get benefit of this scheme unless its ambit is widened until October 2019 to include losses borne by farmers across the state on 94000 hectares due to unseasonal rains,” said Fadnavis in the state Assembly this week.