Siddaramaiah waives off Rs8,165 crore farm loans in Karnataka

Farm loan waiver

The state joined Uttar Pradesh, Maharashtra and Punjab in announcing limited farm loan relief in recent months, taking the combined costs to their exchequers to around Rs85,000 crore.

Of over Rs 52,000 crore crop loan or short term loan obtained by farmers, 80 per cent (about Rs 42,000 crore) has been obtained from nationalised and grameen banks and 20 per cent (Rs 10,736 crore) from cooperative banks. Bank of America Merrill Lynch predicted that various state governments would waive Rs 2.57 lakh crore (2% of GDP) worth farmers' loans in the run-up to the 2019 general elections. The chief minister, however, had maintained that his government is ready for waiver if the Centre waives farm loans taken from nationalised banks.

While talking on the floor of the house, Siddaramaiah throws a challenge to the BJP to persuade the Central government to waive off the rest of the loans in the nationalized banks.

"While loan waivers may give temporary relief to farmers and boost rural consumption, funding of the same would likely worsen the fiscal deficit and leverage levels of the state governments, unless additional resources are mobilised or other expenditure is controlled", credit rating agency ICRA said.

"State BJP leaders have no moral right to demand loan waivers". Several other conditions have been imposed by the government which will exclude farmers who have any other alternative sources of income, owning four-wheelers, those who have relatives working for the government, tax-paying farmers.

The Punjab government had announced crop loan waiver on Tuesday to the tune of Rs 2 lakh to small and marginal farmers.

"This will benefit 22,27,506 farmers in the state", Siddaramaiah announced to thumping applause in the legislative assembly on Wednesday.

Maharashtra Chief Minister Devendra Fadnavis had likewise declared a farm loan waiver on June 4. He said, "Instead of merely debating the government must act immediately and write off farm loans". Siddaramaiah, by urging Prime Minister Narendra Modi to tell big banks to waive farmer loans in Karnataka, has put the saffron party in a quandary.

The state government has chose to give a flat debt relief worth Rs 2 lakh to marginal irrespective of their loan amount.

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