Home >Politics >Policy >Siddaramaiah waives off Rs8,165 crore farm loans in Karnataka
A file photo of Karnataka CM Siddaramaiah. His government would waive off crop loans of up to Rs50,000 per farmer availed till 20 June. Photo: Hemant Mishra/Mint
A file photo of Karnataka CM Siddaramaiah. His government would waive off crop loans of up to Rs50,000 per farmer availed till 20 June. Photo: Hemant Mishra/Mint

Siddaramaiah waives off Rs8,165 crore farm loans in Karnataka

Karnataka chief minister Siddaramaiah announces waiver off Rs8,165 crore worth of crop loans borrowed by farmers from cooperative banks

Bengaluru: Karnataka chief minister Siddaramaiah on Wednesday announced the waiver of Rs8,165 crore worth of crop loans taken from cooperative banks, yielding to pressure from farmer groups, opposition parties and similar waivers in other states.

The government will waive crop loans of up to Rs50,000 per farmer availed until 20 June, a move that will benefit 2,227,506 farmers in the state, Siddaramaiah announced to thumping applause in the legislative assembly.

A directive to this effect will be issued at the earliest, the chief minister said.

The decision to waive off farm loans is likely to increase the chances of the Congress government to retain power in the 2018 state assembly elections. It may be recalled that the Congress government at the Centre had waived loans worth over Rs52,000 crore just before the 2009 Lok Sabha elections in which it came back to power.

“Loans worth Rs8,165 crores will be waived, benefitting 2,227,506 farmers across state. We know that empowering farmers is #EmpoweringKtaka," Siddaramaiah wrote on microblogging site Twitter on Wednesday.

The chief minister also clarified in a tweet that loans up to Rs50,000 will be waived in full and that loans above Rs50,000 will be eligible only if the farmer repays the remaining debt.

Karnataka, which faced a second successive drought year in 2016-17, has been suffering from an acute drinking water shortage and declining agricultural activity.

Shifting the focus on the Union government to do its part, Siddaramaiah requested the Centre to waive off crop loans of Karnataka farmers worth about Rs42,000 crore taken from nationalized and commercial banks.

Karnataka, which faced a second successive drought year in 2016-17, has been suffering from an acute drinking water shortage and declining agricultural activity

However, finance minister Arun Jaitley on Tuesday ruled out farm loan waivers by the Centre and said the government would adhere to its fiscal targets.

“This (loan waiver) is under pressure. He (Siddaramaiah) had always maintained that waiving off loans is not the right thing to do as it discriminates against honest payers," said Narendar Pani, a Bengaluru-based political analyst and professor at the National Institute of Advanced Studies.

Pani said Siddaramaiah’s loan waiver announcement was “blunting of a possible BJP instrument" meant to deny the opposition the use of this issue against him.

Former chief minister and BJP’s chief ministerial candidate in Karnataka, B.S.Yeddyurappa, said waiving off Rs50,000 was “no big achievement." “Had this decision been taken earlier, then it could have save the lives of many farmers," he added. Yeddyurappa said the chief minister’s (in) actions would force the state into early polls-possibly by December.

Since April, four state governments—Uttar Pradesh, Punjab, Maharashtra and now Karnataka—have announced farm loan waivers totalling Rs85,024 crore and benefiting 14.9 million farmers.

Incidentally, Yeddyurappa’s successor and party colleague Jagadish Shettar had announced waiving off of up to 5,000 per farmer totalling ,600 crore ( 900 crore in the first year and around 2600 crore by the successive Congress government post elections in 2013) and benefitting 16 lakh farmers in 2012.

“This was a politically coloured demand and all parties are here to benefit," said Harish Ramaswamy, political analyst and professor at the Karnataka University, Dharwad.

Total farm loans in Karnataka stand at over Rs1.16 trillion. Of this, crop and short term loans account for over Rs52,000 crore. Crop loans taken from state cooperative societies account for Rs10,736 crore (20-22% farmers), while loans taken from nationalised and commercial banks account for over Rs42,000 crore (around 80% of farmers), Siddaramaiah said.

Sayantan Bera from New Delhi contributed to this story.

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