Maharashtra: New farm loan waiver likely to cost Rs 10,000 crore

Maharashtra: New farm loan waiver likely to cost Rs 10,000 crore

Total amount for loan waiver for 2001-08 period, combined with 2009-16 period won’t cross Rs 35,000 crore, officials say

Mumbai farmer protest
More than 30,000 farmers march towards Mumbai to demand their loans waived. (Express photo by Deepak Joshi/File) 

The state government’s decision to provide additional loan waiver to debt-ridden farmers for loans availed between 2001 and 2008 is likely to cost Rs 10,000 crore. The government had announced the latest waiver following a farmers’ agitation on Monday Highly placed sources in the government told The Indian Express, “The government is committed to give the loan waiver announced by Chief Minister Devendra Fadnavis to eligible farmers and tribals across Maharashtra.”

“Overall, it is our preliminary estimate that loan waiver between 2001 and 2008 and the current loan waiver (from 2009 to 2016) together will not cross Rs 35,000 crore,” a senior official said.

The official added, “In June 2017, the government announced a loan waiver of Rs 34,200 crore for 89 lakh farmers. The financial estimate and number of farmers were based on statistics provided by the State Level Bankers Committee.” However, after a thorough scrutiny, it was noticed that there were almost 22 lakh ghost accounts. The deletion of these ghost accounts helped to check corruption and save Rs 10,000 crore. The introduction of online (digital) loan waiver process helped the administration to shortlist eligible and genuine farmers in whose accounts the loan waiver was directly credited.

On Monday, Fadnavis announced the government decision to extend loan waiver to farmers who were not given any benefit under the Congress-NCP government’s loan waiver announced in 2008. In the UPA government, which was led by the Congress, a sizeable number of farmers specially in the tribal belt of Maharashtra did not get a loan waiver, said an official. Following a demand from the Akhil Bharatiya Kisan Sabha during the farmers stir, the chief minister on Monday agreed to waive farm loans availed between 2001and 2008. Almost 24 hours after the announcement, the government has started the process to set up a committee, which would make a list of eligible farmers and tribals for the loan waiver.


A senior officer associated with the loan waiver process said, “It is going to be a tedious process as we have to ensure financial institutions don’t misuse the loan waiver to mop up funds.” The government has decided to adopt the same guidelines as the current waiver and write off loans up to Rs 1.5 lakh for a family, irrespective of size of land holding. Sources in the finance department and cooperative department said, “At present, the loan waiver post 2009 to 2016 will benefit approximately 67 lakh farmers. The total funds will not exceed Rs 25,000 crore.”

The government has already provided Rs 23,000 crore for 54 lakh farmers. The loan waiver for farmers and tribals from 2001 to 2008 may require fresh allocations depending on number of debt-ridden farmers. However, officials believe even if they consider all options, the cost is unlikely to exceed Rs 10,000 crore.

However, sources said, “A foolproof mechanism will have to be in place to ensure it is not misused by undeserving farmers.” It is believed that a sizeable section in the backward region of Vidarbha, Marathwada and north Maharashtra will benefit from the loan waiver (2001-2008). Recalling the loan waiver during Congress-NCP government, a senior officer in the ministry of cooperation said, “In the UPA government the loan waiver was for farmers with a land holding upto two hectares. It was a disadvantage to farmers from Vidarbha who have larger non-irrigated land unlike their counterparts in western Maharashtra and parts of north Maharashtra where farmers with smaller land holding earn higher because of fertile land.”

Citing an example during Congress-NCP loan waiver, he said, “In the Congress-NCP government in six districts of Vidarbha, the total loan waiver was Rs 286 crore, almost at par with that of Mumbai, at Rs 287 crore.”