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Monday, July 23, 2018

2008 and after: The great loan writeoff rush

The government of Amarinder Singh is under tremendous pressure to announce a waiver.

Written by George Mathew | Published: April 13, 2017 12:30:52 am
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In the 9 years since Manmohan Singh’s UPA government announced a Rs 65,000 crore debt waiver for well over 3 crore small and marginal farmers under the Agricultural Debt Waiver and Debt Relief Scheme, 2008, similar announcements have been made by 5 governments in 4 states — and at least 3 more governments are under great pressure to do the same. One of the waiver announcements was rejected by lenders.

UTTAR PRADESH: Chief Minister Yogi Adityanath earlier this month waived loans adding up to Rs 36,359 cr taken by about 94 lakh small and marginal farmers, fulfilling the BJP’s pre-poll promise. The waiver amount includes Rs 5,630 cr taken by 7 lakh farmers whose accounts were declared non-performing assets (NPAs) by banks.

TAMIL NADU: Last year, late Chief Minister J Jayalalithaa waived the loans of 16.94 lakh marginal and small farmers who owned less than 5 acres of land, imposing a burden of Rs 5,780 cr on the state. Last week, the Madras High Court asked the Tamil Nadu government to waive additional farm loans to the tune of Rs 1,980 cr. The order is expected to benefit over 3 lakh farmers who were not covered under the loan waiver scheme.

TELANGANA: In 2014, K Chandrasekhara Rao’s TRS government waived crop loans to the tune of Rs 17,000 cr to fulfill its pre-poll promise. The fourth and final instalment of Rs 4,000 crore was paid to bankers this week. Crop loans up to Rs 1 lakh of 36 lakh farmers were waived.

ANDHRA PRADESH: N Chandrababu Naidu’s TDP promised a farm loan waiver worth Rs 1.50 lakh crore before the state elections in 2014. However, banks refused to play ball, citing the size of the waiver and its likely impact on credit repayment discipline.

UTTAR PRADESH: In 2012, on the 74th birthday of Samajwadi Party chief Mulayam Singh Yadav, the Akhilesh Yadav government wrote off farm loans worth Rs 1,650 cr, fulfilling an election promise. Close to 7.2 lakh farmers who’d taken loans of up to Rs 50,000 from rural cooperative banks, benefited.


MAHARASHTRA: Political parties have been clamouring for a waiver, but the BJP-led government is undecided. The waiver, if it comes through, is expected to benefit some 31 lakh farmers, and cost the exchequer Rs 30,500 cr.

HARYANA: Parties have been demanding a waiver of loans amounting to Rs 56,000 cr for 15.5 lakh farmers. The M L Khattar government has said it is considering the proposal.

PUNJAB: The government of Amarinder Singh is under tremendous pressure to announce a waiver. The burden could be backbreaking for an already cash-strapped state — farm loans are estimated to be between Rs 69,000 cr and Rs 88,000 cr.

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