BENGALURU: Chief Minister H D Kumaraswamy's grand Rs 49,000 crore farm loan waiver plan seems to have hit a hurdle in its very initial stages. The government's plan to reimburse banks for the waiver in four instalments will have to take a back seat for now with some nationalised banks unwilling to accept payment in instalments.
Chief Minister H D Kumaraswamy in an interview to The New Indian Express said that he now intends to pay off loans at one go albeit in the next annual budget. The sum of this one-shot payment is expected to be Rs 23,000-24,000 crore.
The Karnataka 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 agreed 'in-principal' to work with the government and formed two sub-committee to look into the modalities of repayment. In the absence of any agreement signed between the government and the banks, TNIE has now learnt that a few banks have withdrawn their support to the government's move to reimburse loans in instalments.
"All banks were willing to accept payment in four instalments after multiple meetings with me and my officers 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 at one shot," Chief Minister H D Kumaraswamy told The New Indian Express. He added that he was in the process of readying plans for revenue collection to fund the waiver.
The Karnataka cabinet has already issued a government order for a waiver with cooperative banks. The order to clear the waiver for nationalised banks is due to be cleared in the next cabinet meet. "We have asked banks to give us details of loan accounts and it will take till December for it 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. in his own admission, the waiver of loans in nationalised banks is expected to be around Rs 34,000 crore.
The Rs 6,500 crore fund 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, H D Kumaraswamy said it was not impossible. "Everything is difficult but there is an opportunity to solve it too," he said.
Waiving off loans from nationalised banks in the next budget, economists believe, will mean that the waiver will take effect only from 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 it means there will be no fresh loans given," said Narendar Pani, Economist and political analyst.