Andhra cabinet gives nod to farmers’ loan waiver

RBI seeks report from Telangana Our Correspondent HYDERABAD — In Telangana, where the Telangana Rashtra Samithi (TRS) government is faced with a similar dilemma on mobilising funds for crop loan waiver, received a jolt when the RBI sought a fresh report from the state on the damage caused to crops on account of the heavy rains in the aftermath of Phailin cyclone in October last year. The Telangana cabinet, it may be recalled, had given its nod for the crop loan waiver of up to Rs100,000 and had sought the RBI’s approval for rescheduling of such loans. The TRS government had declared over 300 mandals as cyclone-affected and had sought rescheduling of loans amounting to Rs70 billion. The loan waiver scheme in Telangana would cost the state treasury Rs 190 billion, and the RBI, while rejecting the loan waiver scheme, in principle agreed to rescheduling of the loans. Sources said the RBI, following its suspicion on the mandals recently declared cyclone-affected, has sought an independent report from banks in these mandals regarding the extent of damage caused to crops and the difference between agricultural production achieved during the previous two years to assess the ground situation. news@khaleektimes.com

Chief Minister N Chandrababu Naidu, describing the decision as a “courageous move” after the cabinet meeting on Monday, said the burden on the state exchequer on account of the loan waiver scheme would be to the tune of Rs430 billion.

Even farmers who had repaid their loans will be eligible for a deposit of Rs150,000 into their accounts, he said, adding that the government decision was based on humanitarian grounds to help the distressed farmers in the state.

Stating that the government was still waiting for a response from the Reserve Bank of India on rescheduling of crop loans, Naidu said the cabinet had also decided to set up a committee to look into ways and means to raise funds for the purpose. “If the apex bank agrees to rescheduling of crop loans, the farmers can go in for a loan again for the kharif season, failing which the state would pay the banks,” he said.

“We have informed the RBI that the state government would repay the loan dues (to banks) in 6-7 years upon implementation of the loan waiver, but the central bank is yet to responded,” Naidu said.

“The committee will look into various sources of funds mobilisation. The state government intends to create a farmers’ welfare cess in revenue-generating departments to pool up resources. We will also mobilise income from mining activities and create an escrow account for securitisation of funds,” Naidu said, adding that another fund raising avenue that the government was looking at was the disposal of massive stocks of seized red sanders, which has huge demand in the global market.

Earlier, an expert committee headed by Nabard ex-Chairman P Kotaiah to look into the loan waiver issue submitted its report to the chief minister on Monday recommending a limit of Rs100,000 per family but the cabinet decided to enhance the cap to Rs150,000.

The announcement comes as a major relief to farmers in the neighbouring state as there was speculation that the farm loan waiver scheme, announced with much gusto during the general election campaign, would be watered down.

The cash-starved Andhra Pradesh government which started with a negative balance of Rs150 billion post bifurcation of united Andhra Pradesh, was considering various measures to minimize the impact of the loan waiver scheme on the state economy. — news@khaleejtimes.com