Centre may absorb states’ debt waiver costs, says FM

Centre may absorb states’ debt waiver costs, says FM
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First Published: Mon, Jun 30 2008. 11 21 PM IST

Updated: Mon, Jun 30 2008. 11 21 PM IST
New Delhi: The Union government said it would consider adding to the size of its Rs71,680 crore farm loan waiver costs by absorbing prior farm debt relief given by state governments through cooperative credit institutions, even as ineligible farmers across the country demanded explanations from harried bankers.
(FARM LOAN TRACKER) The decision to consider requests by states was announced by finance ministerP. Chidambaram on 30 June, the deadline for the debt relief package. State governments set laws governing cooperative credit societies.
“The Centre will look into the demand of the state governments after completion of the ongoing debt waiver process (through banks),” Chidambaram said in Ariyakudi, Tamil Nadu.
Meanwhile, as the last set of financial institutions raced to meet the 30 June deadline, farmers who missed out on the debt relief package angrily sought explanations from bankers.
“The procedure (for loan waiver) is very complicated. Bankers are having quite a time managing the farmers at the field level. Farmers whose names are not in the list are asking the bankers for the reasons,” admits the head of a private sector bank with a large branch network in Tamil Nadu, who didn’t want to beidentified.
Bankers concede that the many conditions the finance ministry set for farmers to qualify for debt relief was the primary cause for resentment.
“The farmers don’t have clarity about the scheme as there are various conditions and they find it difficult to understand,” said the head of another bank, who, too, didn’t want to be identified.
As the final lists were being announced in some regions, farmers who knew they had not qualified for the waiver came to find out which of the farmers in their region had made the list.
“Farmers are coming in bunches and a lot of them are going back disappointed. While most of them not qualifying for waiver knew from before they will not qualify, they are coming to see who are the farmers figuring in the list,” said a branch manager of a nationalised bank in Deeg,Rajasthan.
The loan waiver package is being funded by the Congress-led United Progressive Alliance government out of the Central exchequer.
Andhra Pradesh, which is currently governed by a Congress government, had earlier announced a monetary package for farmers who did qualify for the Central loan waiver package. State chief ministerY.S. Rajasekhara Reddy had announced a cash benefit Rs5,000 to around 2.2 million farmers who paid their loans back in time and didn’t qualify for the new debt waiver scheme.
Banks have also begun to announce that farmers who have got their loans written off under the package can now approach banks for fresh loans to carry out agricultural activities for a new kharif season. According to a press statement issued by public sector Punjab National Bank, its chairman and managing director K.C. Chakrabarty told borrowers on 30 June during a visit to Palsana, Rajasthan, that farmers who had their debt written off could approach the bank for fresh financing.
Mint’s C.R. Sukumar in Hyderabad, Sangeeta Singh in New Delhi and Vidhya Sivaramakrishnan in Chennai, and PTI contributed to this story.
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First Published: Mon, Jun 30 2008. 11 21 PM IST