MP govt planning to waive off interests on farm loans
Move will allow farmers to pay principal of loan sum in 3 instalments
BHOPAL: The Madhya Pradesh (MP) government is likely to announce a waiver of farm-loan interests in the state, a step aimed at curbing rural angst in the run up to Assembly elections scheduled in November.
Five states, three of them BJPruled, have announced farm-loan waivers so far, as distress in the countryside emerges as a key political challenge.
“A proposal to write off interests is under consideration to give relief to farmers. A decision has not been taken yet but it is likely to come up before the Cabinet soon,” Gauri Shankar Chaturbhuj Bisen, the agriculture minister of MP, told HT here Monday.
A burst of discontent in the heartland farming state, like that of neighbouring Maharashtra, laid siege to the three-time Shivraj Singh Chouhan-led government last year.
Five farmers were shot dead during a violent farmers’ uprising on June 6, 2017 in the central city of Mandsaur, leading to an escalation. The farmers had blocked roads and dumped their produce and milk on the roads, demanding a loan waiver and profitable prices. The state government, wary of a political fallout, quickly announced a flagship price-deficit scheme in October 2017 to pay the difference between the prices farmers get and the average modal prices of commodities.
“Our chief minister, when he went on that fast following the Mandsaur incident, indicated then that he would come out with a policy on this. The final shape of this is not ready yet. It’s in the pipeline...” Bisen said.
He said the main idea was to convert outstanding farm loans into zero-interest loans, so that defaulting farmers became eligible for fresh credit again. “This will be a big relief.”
Giving an example, the minister said, if the total outstanding loan amounts were between ₹6,000-6,500 crore, and if the outstanding interests were roughly ₹2,000 crore, then the government “could consider that this interest is waived off”. Farmers could pay off the interest-free principal outstanding in three equated installments over the next three years, Bisen said. “So this is not a loan waiver as such, but a waiver of outstanding interests,” the minister added.
He said ₹4,000 crore had already been allocated for rural sectors in the state’s budget.
Some farmer organisations in the state however, are preparing to launch a fullscale agitation for a complete loan waiver. “We demand a full loan waiver before the elections. We are launching a non-cooperation movement and farmers won’t pay any loan dues,” said Kedar Sirohi, the leader of Aam Kisa Union, Madhya Pradesh.
So far, Maharashtra, UP, Rajasthan, Karnataka and Punjab have announced farm-debt waivers. These waivers by the five states together are likely to widen the combined fiscal deficit of states by ₹1,077 billion or 0.65% of GDP, according to Devendra Kumar Pant, chief economist at India Ratings & Research.