RS 3.12 TRILLION WRITTEN OFF AS FARM LOANS SINCE 2008

A report prepared by an internal working group of the Reserve Bank of India (RBI), on how to improve the credit flow to the agriculture sector, which was presented to RBI Governor Shaktikanta Das on 6 September 2019, has revealed that Rs 3.12 trillion of public money distributed, as farm loans, has been waived off by both the Central government and various state governments in the last 11 years. The RBI in its report had stated these waivers were happening due to political reasons as was evident from the timing of the announcements (all happened in election years) to waive off the loans indicated.

The report titled “Report of the Internal Working Group to Review Agricultural Credit”, has stated that from the time of mega waiver of farm loans that was undertaken by the UPA government in May 2008 and till September 2019, when 10 other states gave farm loan waivers, a massive Rs 3.12 trillion of farm loans have been written off. As per the RBI’S study, the first major programme of waiving off farmer loans in this decade was undertaken in May 2008 in the election year budget in which then Finance Minister P. Chidambaram announced a loan waiver of Rs 71,680 crore or Rs 0.71 trillion which includes at least 3 crore creditors getting a full waiver and at least 60 lakh farmers getting their loans “rescheduled”.

This waiver was described by experts as a step taken in view of the approaching 2009 general elections and it covered loans given by Scheduled Commercial Banks (SCBS), RRBS, Cooperative Credit Institutions (both urban and rural) and local area banks. It covered outstanding direct agriculture loans (including both short-term and investment loans) that were disbursed between 31 March 1997 and 31 March 2007 and contin