Maharashtra CM Devendra Fadnavis announces Rs34,000 crore farm loan waiver
Maharashtra chief minister Devendra Fadnavis said that the loan waiver would make nearly 90% of the indebted farmers in the state 'debt-free'
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Mumbai: The Maharashtra government on Saturday approved a farm loan waiver of Rs34,000 crore that would benefit 8.9 million farmers in the state. Chief minister Devendra Fadnavis told reporters that the loan waiver would make nearly 90% of the indebted farmers in the state “debt-free".
The government also decided to raise the cap of loan waiver per farmer to Rs1.5 lakh regardless of the land holding. Earlier this week, a high-powered group of ministers headed by revenue minister Chandrakant Patil had offered to cap the waiver at Rs1 lakh.
Reiterating that this was a “historic loan waiver" in the history of India and any state, Fadnavis, however, categorically stated that the government could not take a bigger financial burden than this. “Rs34,000 crore is a huge burden and we may have to cut down on some government works. Fiscal discipline will have to be reinforced to offset the impact on state finances," he said.
Farm organisations and political parties have been insisting on a blanket loan waiver without riders which, according to Fadnavis, would cost a whopping Rs1.14 trillion and was not within the means of any government. Fadnavis said Maharashtra had one of the lowest—Rs54,000—per agriculture household debt in the country which was half the per household debt of several states including smaller states like Kerala and Punjab.
Fadnavis said the government had tried to build a wide political consensus on the loan waiver modalities and reached out to all political parties and farm organisations. “We want every political party and organisation to appreciate that Maharashtra cannot afford a financial burden more than this and that they would all welcome this loan waiver," he said.
Bharatiya Janata Party’s (BJP) ally Shiv Sena, which was aggressive on the farm debt-waiver issue, has said that it was satisfied with the loan waiver. “This is indeed a historic loan waiver that the chief minister has announced. Uddhav saheb was keen on Rs2 lakh cap but agreed to Rs1.5 lakh when Fadnavis discussed it. We are happy that Shiv Sena’s demand has been accepted," said Shiv Sena leader and transport minister Diwakar Raote who accompanied Fadnavis along with other Sena and BJP ministers at the press conference.
Farm organisations like Shetkari Sanghatana and Akhil Bharatiya Kisan Sabha have, however, termed the loan waiver as a big let down. “This is a big let down and we will resume our agitation and continue it till a blanket loan waiver without riders is announced," Shetkari Sanghatana’s Maharashtra state president Raghunath Patil said.
Fadnavis said the government would, like the Andhra Pradesh and Telangana governments, tie-up with banks to schedule the repayment of these outstanding loans in a staggered manner. “The government cannot make this payment in one year and it will have to be staggered over a period of some years. We will talk to the banks and there possibly will be an additional interest burden on the staggered repayment but there is no other option," Fadnavis said.
The loan waiver has three components. One, farm loans of all indebted farmers whose accounts went into default till 30 June 2016, will be waived off with a cap of Rs1.5 lakh per farmer. This would directly benefit 3.6 million farmers. Two, farmers who have regularly repaid their loans will be given a bonus of 25% of their debt with Rs25,000 cap. Three, around 6 lakh farmers whose loans have been restructured will also be given the benefit of loan waiver in the form of a one-time settlement scheme under which the government would make a contribution of Rs1.5 lakh per account.
“In total, the Rs34,000 crore waiver will help 8.9 million farmers. Among these, 7/12 extracts of 4 million farmers will become completely debt-free while others will have the benefit of Rs1.5 lakh waived off from their total debt, one time settlement package, and Rs25,000 bonus. Never in the history of any state has a farm loan waiver benefitted so many farmers," Fadnavis said.
Fadnavis emphatically mentioned that this loan waiver was targeted at “genuine farmers who are in distress" and that elected representatives (including local or panchayat bodies), traders who are farmers but who paid the value added tax, big farmers who paid income tax, and central and state government employees who had their names on the 7/12 extracts as farmers would not be eligible for the waiver.
He said the government had carefully studied the previous loan waiver announced by the erstwhile United Progressive Alliance (UPA) government in which Maharashtra had a share of Rs7,000 crore. “The Comptroller and Auditor General has pointed out several irregularities in this loan waiver. That is why we have targeted this loan waiver at farmers only," he said.
Asked how would the government raise money to finance the loan waiver, Fadnavis said the government would explore all options that other states which have declared a similar sop were taking but did not elaborate.
At the same time, Fadnavis said the government would not stop making long term investment in the agriculture sector irrespective of fiscal constraints and even if it meant increasing the fiscal deficit. Maharashtra’s 2017-18 budget projects the fiscal deficit at 1.53% of the state gross domestic product(GSDP). “As I have often stated, loan waiver is not a permanent solution to the farm crisis because the farmer will again become debt-ridden tomorrow. That is why long-term investment is needed in the farm sector and we will not stop making it whatever the fiscal constraints," Fadnavis said.
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