BENGALURU: Facing financial crunch and limited scope to mobilise additional resources, Chief Minister
H D Kumaraswamy is expected to limit his farm loan waiver scheme to just small and marginal farmers with land holdings of up to 5 acres. He is also considering the option to seek one-time relaxation from the Fiscal Responsibility Act so that the state could go for big borrowing to fulfil its mega promise.
Kumaraswamy has convened a meeting of managing directors of cooperative banks, apex bank and officials of Cooperation Department on Monday. This is to get a clear picture of the total farm loans disbursed by banks and various options that can be explored to deliver his farm loan waiver promise.
A clear picture on the modalities for implementation of the promise is likely to emerge after the meeting.
According to sources in the Finance Department, farm loan waiver would be implemented in a staggered manner. The state is almost certain to take the Punjab model where the benefit has been limited to farmers with land holdings up to 2.5 acres and a maximum loan amount of Rs 2 lakh.
However, Kumaraswamy is likely to show relaxation on land limit by extending the benefit to farmers with up to 5 acres and setting Rs 2 lakh limit on the loan amount. The scheme will be announced in the budget to be presented by Kumaraswamy on July 5. “The scheme will not cover big and wealthy farmers.
The scheme is likely to be implemented in a staggered manner with loans availed from cooperative banks to be waived first. As for the loans availed from commercial banks, the state government is considering a proposal to first waive the interest and then waive the principle in a phased manner,” a source in the Secretariat involved in the process said.
BIG BORROWING INEVITABLE
The total farm loan due has been estimated to be around Rs 53,000 crore and the daunting task of mobilising resources has compelled the state government to seek desperate measures. The government is contemplating to seek one-time relaxation from the Fiscal Responsibility Act from the Centre to enable it to borrow heavily. The Act limits the state’s liabilities to 25 per cent of GSDP. Currently, Karnataka’s total liabilities stand at Rs 2,86,790 crore which is 20.36 per cent of the GSDP.