Home / Controversy / Politics / Punjab 3rd state to waive farm loans, to take Rs 24,000 crore hit

Punjab 3rd state to waive farm loans, to take Rs 24,000 crore hit

CHANDIGARH: The farm loan waiver fever is spreading across the country, threatening to place a huge additional burden on the already creaking finances of state governments.

On Monday, Punjab became the third state this year — after UP and Maharashtra+ — to announce a total waiver of all crop loans up to Rs 2 lakh for small and marginal farmers (up to 5 acres) and a flat Rs 2 lakh relief for all other marginal farmers, irrespective of their loan amount.

Punjab chief minister Amarinder Singh announced the waiver, one of his key poll promises, in the assembly. He said the move would benefit 10.25 lakh farmers. Some 8.75 lakh farmers have farms of up to five acres.

The waiver+ will cost the debt-ridden state Rs 24,000 crore, according to one estimate. Singh said his government had not decided on whether to take a fresh loan or generate more revenue for the purpose.

The CM refused to say how much the state would need to raise to meet the waiver requirements.

“These are all figures which will be given in the state budget,” he told reporters after announcing the waiver. The state budget is to be tabled on Tuesday.

Punjab had got just 0.8% of the Rs 52,520 crore loan waiver that the UPA-I government had announced in 2008. Effectively, this is the first major debt waiver for the state.

The Punjab CM had been under pressure to announce a loan waiver after UP CM Yogi Adityanath had waived loans+ of up to Rs 1 lakh on April 4. Capt Singh, however, insisted his waiver would provide double the relief announced by UP and Maharashtra.

The decision is based on the interim report of the expert group headed by wellknown economist T Haque.

Capt Singh added his government had decided to take over the outstanding crop loans (from institutional sources) of all families of farmers who committed suicide in the state.

The government has also decided to raise the ex gratia for suicide-affected families to Rs 5 lakh from the existing Rs 3 lakh.

He proposed that the Speaker constitute a five member committee of the assembly to visit families of suicide victims, ascertain the reasons for suicide and suggest steps to check the problem.

He informed the House his government had already decided to repeal Section 67 A of the Punjab Cooperative Societies Act, 1961, which provides for auction of the lands of farmers who can’t pay back their loans.

Capt Singh claimed the previous government, headed by Parkash Singh Badal, had accepted a loan of Rs 31,000 crore to cover the shortfall in the cash credit limit for procurement of food grains, for which his government has to pay Rs 270 crore every month and Rs 3,240 crore annually. Had this not been done, his government would have utilised the additional Rs 31,000 crore to benefit farmers, he added.

The Punjab CM said there are about 18.5 lakh farming families in the state, and about 65% of them are small and marginal; of these, about 70% have access to institutional finance.

 He said a state agriculture policy focusing on increase in farmers’ incomes on a sustainable basis would be formulated soon.

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