Farm loan waiver vs corporate loan largesse
The outstanding debt of Bhushan Steel stands at ₹44,478-crore, which alone is more than the expected ₹36,000-crore farm bad loan in Punjab, which the state government is likely to ‘takeover’. Jindal Steel & Power owes ₹44,140-crore, which is way above the farm loan waiver that UP government is staring at. The corporate offices of Bhushan Steel and Jindal Steel are located in New Delhi but at no stage, has the Delhi government has been asked to write-off these from its own resources.
Maharashtra is seeking a farm loan waiver of ₹30,500crore. This is less than the outstanding loan of ₹34,929crore that Essar Steel alone holds.
How fair is it to allow the banks to write-off Essar Steels bad debt while asking the Maharashtra government to strike out bad farm loans from its own resources?
CLUB FARM LOANS AND CORPORATE LOANS
As a solution, farm loans need to be clubbed with corporate loans. Since both agriculture and industry are state subjects, it is unfair to treat them differently when it comes to loan waiver. Unless this is done, states will always find it difficult to bail out farmers in distress. State governments should refuse to write-off outstanding farm loans from its own revenues.
Not only for the total farm bad debts of nationalised banks, let the cooperative bank/societies loan write-off, in turn, be a responsibility of the National Bank for Agriculture and Rural Development (NABARD).
The states should impress upon the government to set up a farm monitoring group in the PMO in line with the project monitoring group (in the PMO) which looks at recasting corporate loans and also the write-offs.