A Half-hearted Waive
A cash-strapped government finds ways to prune the list of loan-waiver beneficiaries by re-coding eligibility norms
The electoral promise of farm loan waivers was a major factor in the Congress winning Madhya Pradesh in December 2018. The party manifesto said all farmers’ loans of up to Rs 2 lakh would be written off. Then Congress president Rahul Gandhi said the party would do so within 10 days of assuming power. And Chief Minister Kamal Nath did issue waiver orders the very day he took charge.
Now, however, sources in the state government maintain that farmers whose loans exceed Rs 2 lakh will not be covered under the scheme as the promise was to waive loans only up to that sum. This will be a setback to farmers who thought the government would waive Rs 2 lakh off all loans and they would have to repay the amount in excess of that figure. The latest ‘clarification’ will exclude some 500,000 farmers from the beneficiary list.
When news of this development broke out, Congress spokespersons denied it at first. But the next day, a letter
from the chief minister to the farmers appeared in the media. The letter asked farmers to continue repaying their loans.
Already, while announcing the waiver in December, the state government had introduced a clause whereby incometax payers, Class I, II and III government employees, sitting and former MLAs and MPs and a host of former and present political office-holders would not be eligible for the waiver.
This excluded about 700,000 farmers, reducing the eligibility list from 5.5 million farmer beneficiaries to 4.8 million.
The state government first waived loans of farmers who had borrowed less than Rs 50,000, besides those Rs 2 lakh loans that had become non-performing assets due to repayment defaults. This cost the exchequer Rs 7,000 crore and benefitted nearly 2 million farmers. Next to be waived were current loans of up to Rs 1 lakh, covering about 600,000 farmers. The remaining farmers, mostly those who had borrowed from commercial banks, would make up the third lot. Loans from cooperative and rural banks were to be written off on priority.
In an attempt to justify the move, a senior state government official said, on condition of anonymity: “The state government inherited empty coffers and besides, farmers whose loans exceed Rs 2 lakh are well-to-do anyway.”
The state’s financial condition is indeed precarious. It had inherited a Rs 34,000 crore deficit from its predecessor government. Besides, it has to honour commitments such as the bonus on wheat procurement and the differential amounts to be paid under the state’s crop price-protection Bhavantar scheme.
Meanwhile, farmers’ organisations in the state are upset at the state government’s attempts to curtail the beneficiary list. “What the government has done constitutes a breach of trust,” says Anil Yadav of the Bharatiya Kisan Union. “A lot of farmers with loans above Rs 2 lakh have not repaid loans assuming they would be written off. They are being charged interest on it. We are thinking of going to the high court against the decision.”
“Rahul Gandhi had promised farm loans would be waived within 10 days or else the CM would be changed. By that logic, 27 CMs should have been changed till date,” says former CM Shivraj Singh Chouhan. In response, state Congress media coordinator Narendra Saluja retorted, “The BJP had before the 2008 assembly election promised to waive loans up to Rs 50,000 and later reneged on this commitment. More than 25,000 farmers committed suicide in the 15 years of BJP rule. The party has no locus standi on the matter.” The Congress even waved a document that showed its government had waived Chouhan’s brother’s loan.
LOAN RIDER CM Kamal Nath hands over a waiver cheque to a farmer in Bhopal