Karnataka to waive ₹34k cr in farm loans
▪ BENGALURU : The Karnataka government on Thursday unveiled a much-awaited farm loan waiver of up to ₹34,000 crore, giving relief to millions of farmers across the state, capping the waiver at ₹2 lakh per family, as chief minister HD Kumaraswamy presented a ₹2.18 lakh crore budget that made fuel more expensive.
“I have decided to waive all defaulted crop loans of farmers up to 31 December 2017 in the first stage,” Kumaraswamy said. “( For) farmers who repaid the loan within time, as an encouragement to the non-defaulting farmers, I have decided to credit the repaid loan amount or ₹25,000, whichever is less,” he said.
The loan waiver package is an attempt to stick to the ₹53,000 crore write-off Kumaraswamy had announced in the election manifesto of his Janata Dal (Secular), which came to power in an alliance with the Congress party after the May 12 assembly elections.
The chief minister also announced provisions to allow farmers to avail of new loans. “To facilitate farmers to avail new loans, action will be taken by the government to issue clearance certificate by waiving the arrears form the defaulting account. For this purpose, ₹6,500 crore is earmarked in 2018-19 budget,” Kumaraswamy said.
The repayment of loans will be staggered over four years, Kumaraswamy said later at a press conference. In the first year, the government is set to spend ₹10,500 crore towards the waiver package. Additionally, the government has also reiterated its commitment to allocate ₹4,000 crore as part of the farm loan waiver announced by the previous Siddaramaiah-led government in July 2017.
Siddaramaiah had announced waiver of up to ₹50,000 on agricultural loans taken from cooperative banks, worth ₹8,165 crore. Only ₹4,165 crore was released as of last year, Kumaraswamy said.
However, a separate set of guidelines issued later was at variance with the Budget announcement. According to the guidelines, the state government is set to waive ₹30,266 crore of farm loans, benefitting 1.73 million farmers. Additionally, 2.76 million farmers who have made prompt payments on their loans are set to benefit from the incentive scheme of ₹25,000 per farmer, amounting to ₹6,893 crore.
In total, the package, according to the guidelines, will amount to ₹37,159 crore and will benefit all 4.48 million farmers who have availed of credit. The budget has also expanded in size since Siddaramaiah’s pre-election Budget in February from ₹2.09 lakh crore to ₹2.18 lakh crore. Receipts have increased from ₹2.02 lakh crore in the February Budget to ₹2.13 lakh crore.
The fiscal deficit has increased from 2.49% of gross state domestic product (GSDP) to 2.89% of GSDP. The state’s liabilities have increased by around ₹6,000 crore, from ₹2.86 lakh crore to ₹2.92 lakh crore, or an increase from 20.36% of GSDP to 20.75% of GSDP.