The loan waiver announced by Maharashtra government may cost the state at least Rs 45,000-51,000 crore, a report said.
The loan waiver announced by Maharashtra government may cost the state at least Rs 45,000-51,000 crore, a report said. A loan waiver of Rs 2 lakh for farmers has been announced by the newly formed state government with a cut-off date of September 30, 2019, and relief to non-defaulting farmers with a loan more than Rs 2 lakh. “The cost could come down by Rs 12,500 crores if the new dispensation decides to postpone the payments outstanding under the earlier loan waiver scheme into the new one or decides to limit the coverage of farmers under the scheme,” SBI Ecowrap said.
The argument for the loan waiver is that when the banks can write off NPA of the industry then why can’t the same be done for the farmers, the report noted. “Such arguments are mischievous and frivolous. For example, even though Agriculture NPA is Rs 1.1 lakh crores /12.4% of overall NPA, we also need to account for Rs 3.14 lakh crores loan waiver announced in the last decade. Hence, logically, agri NPA/burden for the exchequer/banks could be as much as staggering Rs 4.2 lakh crores,” it added. The potential loan waiver for the state could add up to Rs 4.7 lakh crore or 82 per cent of the industry NPA.
The credit culture takes a hit with loan waiver, the report mentioned adding that it increased the indebtedness of farmers. Rather than loan waivers, the government must introduce these measures to improve the financial situation of farming, the report also said. There is a need to build competitive and inclusive video chains for food products. The government can also implement the Model Agricultural Produce. ”We are not sure what has happened to the suggestion of providing a tenancy certificate to tenant farmers as was promised in the Budget 2018. We must do it on a war footing. Fourthly, removal of Hypothecation Charge on Crop Loans. Fifthly, the KCC scheme must be revamped,” it added.