BENGALURU: Chief Minister H D Kumaraswamy’s grand Rs 49,000 crore farm loan waiver plan seems to have hit a hurdle with some nationalised banks expressing unwillingness to accept payment in instalments. The government’s plan was to reimburse banks in four installments. Kumaraswamy, in an interview to The New Indian Express, said that he now intends to pay off loans taken from these banks in one go, but provision for it will be made only in the next annual budget. This one-shot payment is expected to be in the range of Rs 23,000-24,000 crore.
The state government, after multiple meetings with representatives of cooperative, nationalised and private banks, had announced that reimbursement of the farm loan waiver will be done in four instalments over the next four years. The State Level Banker’s Committee had in-principle agreed to work with the government and had formed two sub-committees to look into the modalities of repayment. In the absence of any formal agreement between the government and the banks, TNIE has now learnt that a few banks have now refused to go with the government’s plan.
“All banks were willing to accept payment in four instalments ... but now some are reluctant. But that doesn’t scare me. In the next budget, we will set aside Rs 23,000-24,000 crore to clear off the loans in one shot,” the CM said, adding he was in the process of readying plans for revenue collection to fund the waiver.
The state cabinet has already issued a government order for waiver of farm loans taken from cooperative banks. An order on the waiver of loans taken from nationalised banks is expected to be cleared in the next cabinet meeting. “We have asked banks to give us details of loan accounts and it will take till December for them to be compiled. The process of the waiver will begin immediately after. I will also tell the people how the money will be raised for this waiver,” Kumaraswamy said.
By Chief Minister H D Kumaraswamy’s own admission, the total amount of farm loans from nationalised banks is expected to be around Rs 34,000 crore. The Rs 6,500 crore allocated for loan waiver in this year’s budget will be used to reimburse loans of nationalised banks. While he acknowledged that the task is difficult, Kumaraswamy said it was not impossible. “Everything is difficult, but there is an opportunity to solve it too,” he said.
Meanwhile, making provisions for waiving loans from nationalised banks in the next budget, economists believe, will mean that the waiver will take effect only from the next financial year. “The borrower will be in a fix now. Repaying the loan means he will lose out on the waiver, and not repaying means there will be no fresh loans,” Narendar Pani, economist and political analyst, said.
It won’t help some farmers now
Making provisions for waiving loans from nationalised banks in the next budget, economists believe, will mean that the waiver will take effect only from the next financial year.