The modified farm loan waiver scheme announced by the Union finance minister P Chidambaram on Friday still falls short of rendering justice to the majority of farmers in the dryland areas. The finance minister has not deviated from the general definition of small and marginal farmers, which is not applicable to conditions in dryland areas.

Government has proposed that about 30 million small and marginal farmers will get full debt of their short-term crop loans and overdue of instalments on investment credit that were disbursed by banks till March 31, 2007 and were overdue on December 31, 2007 and remained unpaid till February 29, 2008. Modifying his earlier announcement in his Budget speech, Chidambaram has sought to write off the overdue of instalments on investment credit.

As per general definition cited by Chidambaram a marginal farmer is one who has holding up to one hectare (2.47 acre) and the small farmer is one who has holding up to two hectare (5.94 acre). According to the recent edition of Union agriculture ministry?s Agricultural Statistics at a Glance, resource poor farmers indryland areas, highly dependant on erratic rainfall and without assured irrigation, have higher holding like 54 to 175 acre in Rajasthan, up to to 60 acre in Tamil Nadu, up to 54 acre in Haryana, Madhya Pradesh and Maharashtra. Most of the farmers in dryland areas in different parts of the country would, therefore, not be able to reap the benefits of the loan waiver scheme.

However, Chidambaram has applied his own logic and has selected 237 districts under the government?s two drought programmes ? DPAP and DDP ? and the debt stressed ones under PM’s special relief package. He said that under the one time debt settlement scheme (OTS) where the government would pay 25% of the farmers? loan or Rs 20,000 per indebted farmer, whichever is higher, the outstanding loans of many farmers having more than two hectare holding in these districts would be waived off, as the loans size is comparatively small.

Farmer leaders are not prepared to buy Chidambaram’s logic. ” The modified scheme is no better for farmers in dryland areas. The Rangarajan Committee has said that only 27% farmers are covered under institutional credit. There are about 750 million farmers in the country and the loan waive scheme is meant for those who have sourced credit from banks and do not benefit majority of farmers,” the president of Bharatiya Krishak Samaj, Krishan Bir Chaudhary.

“The finance minister needs to understand the reality of dryland areas and further modify the scheme,” said the senior farmer leader, Mahender Singh Tikait of Bharatiya Kisan Union

The modified scheme has also proposed a bail out from investment loans for dairy, poultry, goatery, sheep rearing, piggery, fisheries, bee keeping, greenhouses, biogas digging wells, installation of pump sets, tractor and bullock purchases, land development, plantations and horticulture.

Chidambaram has estimated that the scheme would benefit 4,30,00,000 farmers ? 30 million farmer under complete loan waiver and 10 million farmers under OTS. The modified scheme would cost the government Rs 71,680 crore.