Andhra Pradesh earmarks Rs5,000 cr for crop loan waiver
State government fulfils important poll promise, also allocates Rs3,188 cr to provide free power supply to farmers
Hyderabad: Revenue-deficit Andhra Pradesh on Friday allocated ₹ 5,000 crore towards a crop loan waiver in its agriculture budget for 2014-15, even as the state government tries to convince Reserve Bank of India (RBI) to reschedule crop loans.
The crop loan waiver fulfils an important poll promise made by chief minister N. Chandrababu Naidu. Andhra Pradesh, which in June was bifurcated to create a new state of Telangana, said last month that it would waive loans of up to ₹ 1.5 lakh for each farmer family, for loans taken as of 31 March.
Neighbouring Telangana followed in Andhra Pradesh’s footsteps when the cabinet of chief minister K. Chandrasekhar Rao sanctioned a crop loan waiver of up to ₹ 1 lakh each last week.
The promise of loan waivers played a crucial role in the victories of both Naidu and Rao in assembly elections in April-May. The governments of the two Telugu-speaking states, however, met with stiff resistance from the banking regulator that expressed concern that a blanket farm loan waiver would set a bad precedent.
Finally, RBI on 8 August agreed to reschedule crop loans up to a maximum of ₹ 1 lakh taken between April and October 2013 in 100 mandals (local administrative units) in Telangana and 120 mandals in Andhra Pradesh.
Telangana and Andhra Pradesh governments estimate the loan waivers to burden their respective state exchequers by ₹ 19,000 crore and ₹ 43,000 crore, respectively.
The Andhra Pradesh government is trying to raise money by selling red sanders that have huge demand in international markets and by mobilizing income from mining activity, chief minister Naidu had said.
About 62% of the Andhra Pradesh population is dependent on agriculture, state agriculture minister P. Pulla Rao said in prepared speech on Friday. The agriculture budget outlay for agriculture and allied sectors was estimated at ₹ 13,108 crore.
Andhra Pradesh presents a separate budget for agriculture.
The state government also allocated ₹ 3,188 crore to provide free power supply to farmers. The government intends to increase free power supply from seven hours to nine hours in a phased manner, Rao said.
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