Karnataka Budget 2018: HD Kumaraswamy's farm-loan waiver unfolds, conditions apply

All loans categorised as overdue crop loans, restructured crop loans and crop loans deemed Non Performing assets (NPAs) by banks will be considered for the waiver.
Karnataka Budget 2018: HD Kumaraswamy's farm-loan waiver unfolds, conditions apply

BENGALURU: In his party’s manifesto HD Kumaraswamy, ahead of the Karnataka polls, had announced an ambitious loan waiver of all farm loans at the cost of about Rs 53,000 crore. Now, as Chief Minister of Karnataka, he has only managed to work out a conditional waiver with a cap of Rs 2 lakh.

After much deliberations, the massive loan waiver has come with expected riders of a cap on the debt limit, workable timeline and, most importantly, on who is eligible for the waiver.
The highlight of the waiver is the government’s decision to reimburse the waiver to banks over a period of 4 years in yearly/half yearly instalments.

Kumaraswamy has announced to waive off all crop loans up to Rs 2 lakh. Loans availed on or after April 1, 2009, till December 31, 2017 from all nationalised banks, regional rural banks, private banks and primary cooperative credit societies, farmer service cooperative societies and Kisan credit card are eligible for the waiver.

All loans categorised as overdue crop loans, restructured crop loans and crop loans deemed Non Performing assets (NPAs) by banks will be considered for the waiver. The waiver of such 17.32 lakh loan accounts is estimated to cost the state exchequer Rs 30,266 crore. This waiver will not apply to farmers whose loans from cooperative banks were waived off by the Siddaramaiah government for loans up to Rs 50,000.

Apart from the waiver, in an attempt to incentivise farmers who have repaid their earlier seasons’ crop loans or Kisan Credit card loans, the government is paying a lump sum of the amount repaid up to Rs 25,000 per family of a farmer. There are 27.57 lakh such accounts and the scheme is estimated to cost the JD(S)-Congress coalition government Rs 6,893 crore. For both schemes, the government will be shelling out Rs 37,159 crore to assist 44.89 lakh farmer loan accounts.

In this financial year, Rs 10,650 will be spent on the waiver including Rs 4,000 crore pending funds towards repayment of the loan waiver announced by Siddaramaiah.

WHAT HAS BEEN EXCLUDED
Crop loans granted to legal entities other than individual farmers, elected representatives, government employees, pensioners who get more than D15,000 per month except ex-servicemen will not be eligible for the waiver. Scheme will not cover gold loans, loans taken from companies, loans given to I-T payers with more than D4 lakh assessable income, loans for purchase of vehicles, loans against pledge, loans availed by self help groups, tie up loans, loans for sugar factories for onward lending, loans granted for allied activities or fisheries or loans that are fraudulent.

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