Farmers work with oxen on a field in Maddur, 80km from Bengaluru, in Karnataka.(Source:Bloomberg)

Farm Loans Worth Rs 53,000-Crore In Focus As Karnataka Plans Waiver

Karnataka Chief Minister HD Kumaraswamy has sought 15 days for a plan to waive farm loans in the state.

Kumaraswamy, who was sworn in as the chief minister last week, and Deputy Chief Minister G Parameshwara met farmer representatives from 30 districts today and said that the waiver will be implemented in phases. “Total farm loans in the state are estimated at Rs 53,000 crore,” he told farmers at Vidhana Soudha, the secretariat.

A loan waiver within 24 hours of coming to power was one of the key promises in the election manifesto of the Janata Dal (Secular), of which Kumaraswamy is the state president. He sought a “breathing period” on Wednesday to come up with a plan, while assuring farmers that the waiver will reach all homes. “My intention is to waive farm loans of all amounts.”

Also read: Karnataka May Add To Rs 88,000 Crore In State Farm Loan Waivers Already Announced

Over the past 12 months, six states have announced loan waivers amounting to Rs 88,000 crore even as banks battle mounting bad loans. They include Maharashtra, Uttar Pradesh, Punjab, Tamil Nadu, Andhra Pradesh and Telangana. A report by Kotak Institutional Equities said Karnataka accounts for 8 percent of agricultural loans in India. Nationalised banks account for more than half of the agricultural loans disbursed in the southern state, with the State Bank of India leading at 17.3 percent as of 2017, according to the report. Private sector banks accounted for 15.5 percent.

Acute water scarcity and crop failure is the norm in many districts of Karnataka following years of scanty rainfall, leading to suicides of debt-ridden farmers. Ahead of the recent assembly elections, political parties made the agrarian crisis a key issue.

The Bharatiya Janata Party had promised a waiver of crop loans up to Rs 1 lakh from public-sector and cooperative banks in its manifesto. BJP state president and former Chief Minster BS Yeddyurappa had announced a state-wide bandh (lockdown) a few days ago if crop loans worth Rs 53,000 crore weren’t waived.

A nodal officer will be appointed in all districts to examine the appeals for loan waiver and loan utilisation, Kumaraswamy said. The government had asked farmers to furnish all details in two weeks. “The first focus will be banks in non-urban areas.”

Karnataka Chief Minister HD Kumaraswamy and his deputy G Parameshwara before a meeting with farmer associations at the Vidhana Soudha in Bengaluru on Wednesday.(Source:PTI)

The chief minister also sought suggestions to improve the effectiveness of the waiver by excluding non-deserving sections. Some of them included:

  • Farmer families paying income tax of over Rs 4 lakh.
  • Individual farmers that have taken farm loans but invested them in other businesses.

Kumaraswamy said that he will meet the heads of nationalised banks in the next two-three days. Parameshwara will discuss the issue with Rahul Gandhi, president of the Congress, with which the JD(S) is in an electoral alliance in Karnataka.