AP govt keeps poll promise, to set aside Rs 5,000 cr for loan waiver

Written by BV Mahalakshmi | Hyderabad | Updated: Aug 19 2014, 07:33am hrs
The Andhra Pradesh government is planning to set aside R5,000-7,000 crore for a proposed loan waiver scheme to be announced at Wednesdays budget. This is part of the first phase of the total provisions made for the loan waiver scheme of the government to help farmers avail of fresh loans for this sowing season.

The government has already issued guidelines for the loan waiver scheme, which is estimated to cost around R43,000 crore to the state exchequer. Further, it has started compiling eligible borrowers' data to implement the R1.5-lakh limit per family. The complete data is expected to be ready in the next 2-3 months. At a recent interaction at Kurnool, chief minister N Chandrababu Naidu told FE that his government has decided to complete this 'issue' as soon as possible. We are working on all possibilities to complete the waiver scheme as part of our election promise. If the farmers choose to repay loans without waiting for the waiver, it would be in their best interests because they would be able to access fresh loans and still remain eligible for the waiver,' he said.

To begin with, the token provision of R5,000-7,000 crore would take care of the initial payments to the banks, said a senior official in the government. The banks have categorically said that only if the old loans are cleared, would there be fresh disbursement for the farmers. The government is also talking to different lenders, including a couple of banking institutions, besides auctioning red sanders and pledging future revenues of state PSUs for mobilising about R23,000 crore, a senior official said on condition of anonymity.

Accordingly, in its set of guidelines, the state government has asked farmers to repay the loan first and then seek reimbursement. The scheme would be applicable to crop loans, including gold loans sanctioned for raising crops extended by scheduled commercial banks, regional rural banks (RRBs) and cooperative banks in all the 13 districts of the state. The primary agriculture cooperative credit societies and farmers service cooperative societies, which are accredited to lending institutions for advancing direct agriculture crop loans to agricultural families, are also covered under the scheme.

The state government said for all those who have repaid the loan, the eligible amount would be credited to their account and they would be permitted to draw it as well. In case of those who have not repaid the loans, the amount would be released to them according to the priority given for the loans. The guidelines mentions that the crop loans were to be given first priority followed by converted crop loans while agriculture gold loans for crop purposes were given the last priority.

However, this has raised eyebrows as the farmers claim that they are not in a position to repay and were expecting Naidus poll promises to materialise for a total loan waiver of all crop and gold loans.

"If the loan outstanding of a borrower comprise these three kinds of loans even within the Rs 1.5 lakh cap fixed by the government, they would first receive reimbursement towards crop loans and then for the next two loans in that order. Until the loan was fully cleared either by the farmer or by the government no fresh loan will be given to the borrower, the guideline said.