Govt floats Rs 10K cr debt relief fund; farmers who repaid in Jan-Feb eligible

However, farmers who repaid their outstandings prior to December 31, 2007 would not qualify for any refund or incentive. But sections of bankers have urged the government to offer incentives to those who have repaid their debts.

The RBI has already instructed banks to compile a detailed NPA score-sheet to assess the liability of the government. Nabard has asked regional rural banks and cooperative banks to start collating state-wise data on NPAs arising from farm loans. These banks are slated to submit their respective data within a month.

The government’s debt waiver scheme is expected to sharply reduce indebtedness of small & marginal farmers, with holdings of less than 2 hectare. As the scheme has already received massive support in rural India, the UPA government is now reportedly considering extending it to wipe clean bad assets arising from non-farm credit as well.

The finance minister’s calculations has already given the government sufficient headroom to widen the scope of its debt waiver scheme, should it choose to do so in the run-up to general elections.

Finance minister P Chidambaram had said while announcing Budget 2008-09 last month that the package was aimed at settling NPAs arising from agricultural loans. As a large number of farmers avail of credit for non-farm activities to supplement their livelihood, the government could examine this also.

“Farmers’ indebtedness would continue until this issue is sorted out and the finance ministry must take a decision on this at the earliest,” a banking industry source said.

REAPING REWARDS

Farmers who repaid debts in Jan-Feb to be eligible under debt waiver scheme

Bankers have urged centre to offer incentives to farmers who have repaid debts

RBI has instructed banks to compile NPA score-sheet to assess govt’s liabilities

Govt now reportedly mulling wiping the slate clean for non-farm credit as well