Karnataka Budget 2018: Farmers to get debt-free certificates from August
Bengaluru: How does Chief Minister Mr H.D. Kumaraswamy propose to manage the huge financial burden of Rs 37,259 crore on the state exchequer after announcing the much awaited farm loan waiver scheme? A plan has been formulated to repay the banks the loans in four, half yearly/yearly instalments. With the state government deciding to bear the burden of Rs 6,543 crore non-performing assets (NPAs) in the farming sector, the banks, which otherwise did not have many options to recover the dues from debt-ridden farmers, have agreed to reschedule the loans spread over four years.
As per the eligibility criteria, the scheme will be limited to the amount outstanding in the books of banks as on December 31, 2017 or an amount of Rs 2 lakh per family, whichever is lower. The loans granted on or after April 1, 2009 till December 31, 2017 would be eligible for the waiver scheme. As per the rescheduled scheme, the state has to pay around Rs 10,500 crore to banks in the first year. After negotiations with nationalised banks, the banks have agreed to waive off 50% interest on NPA loans. One of the methods which the government will adopt to mop up the revenue needed is by increasing gross borrowing, which was around Rs 36,000 crore in the previous budget presented in February, 2018 and will now rise to Rs 47,134 crore, sources said.
As per statistics, an estimated 44.89 lakh farmers have outstanding dues to the tune of Rs 55,328 crore loan availed from public sector banks, private banks and regional rural banks. The total number of loan accounts of farmers who will benefit from the waiver is estimated to be 17.32 lakh, whose outstanding loans run into Rs 30,266 crore. Another 27.67 lakh farmers have repaid their previous crop loans promptly and are eligible for an incentive of Rs 25000 each, which would add up to Rs 6,893 crore.
The farmers ineligible for crop loan waiver include elected representatives, income tax assesses, those who have taken loans under gold/jewel loan schemes and from micro finance institutions and urban cooperative banks, vehicle loans and non-priority loans besides government employees and those working in PSUs and government education institutions. CM Kumaraswamy said that the banks would start issuing debt free certificates to all the beneficiaries from next month itself. After that, they can go for fresh loans, if needed. Sources said that from next year, the banks would issue zero coupon bonds to the government, as part of the restructuring of the loans.
“The state government has negotiated the farm loan waiver scheme, which was a hybrid of many schemes, including the Telangana scheme. However. in Telangana, the government had not negotiated with the nationalised and private banks. In this case, both government and banks are in a win-win situation, as the banks will be able to recover loans much more than their expectations,” sources added.
