TO KEEP its pre-poll promise of waiving farm loan of debt-ridden farmers, the Punjab government is preparing to set aside Rs 1,500-2,000 crore in the annual budget to be presented on June 20. As the state government plans to take over the loans of farmers and pay back the lending institutions in installments, the loan waiver is likely to be on the top of announcements in the upcoming budget. Sources in the government said the allocation of waiver would be made in the budget but the benefit would start rolling out after about two months as the waiver scheme takes time.
As the government prepares to help small and marginal farmers, it is not likely to pay off loans by private banks. The core group constituted to assess the farm debt, headed by Dr T Haque, has found that out of a total debt of Rs 74,000 crore on Punjab farmers, only Rs 9,000 crore was lent by cooperative banks, Rs 12,000 crore by nationalised banks and the rest by private banks and moneylenders.
It has been found that out of a total of 18 lakh farmers in the state, about 11 lakh (65 per cent) were under debt as the remaining 35 per cent were leasing their land to contract farmers.
Out of 11 lakh farmers, 80 per cent (9 lakh) were small farmers having land holdings of 5 acres and less. The debt on these farmers was turning out to be Rs 6,000 crore, considering that each farmer gets a maximum loan of Rs 40,000 per acre. According to a communique released by the core group to the Chief Minister’s Office, the State Level Bankers Committee (SLBC) should be asked as to how the crores of rupees were lent by them to farmers, who do not have enough land to raise the amount of loan.
The letter states that SLBC should be asked as to how a marginal land owner with less than 1 hectare of land gets a crop loan of above Rs 5 lakh. It says 40 per cent of total outstanding crop loans on the size of category of marginal land holding is above Rs 5 lakh, another 32 per cent in the same catergory is in the range of Rs 2 to Rs 5 lakh, 37 per cent is more than Rs 5 lakh and 45 per cent is between Rs 2 and Rs 5 lakh. The expert group has called Punjab farmers debt a case of “overfinancing.”
A senior government functionary said they would help small and marginal farmers but not the non-performing assets of private banks. The core group has raised another question with the SLBC that is if they would consider land ownership status or operational land holding status of a farmer while advancing crop loan. And, whether the banks would ensure that the crop loan is advanced only for purchasing of inputs or for consumption or social ceremonies.