The Bharatiya Janata Party (BJP)-led Maharashtra government on Saturday announced a major farm loan waiver scheme that will see debt of up to Rs 1.5 lakh per farmer being written off, costing the exchequer Rs 34,000 crore.
The Rs 34,000-crore relief scheme was announced by Chief Minister Devendra Fadnavis at a press meet in Mumbai.
Named after Maratha warrior king Shivaji Maharaj, the programme will benefit 89 lakh farmers and make 40 lakh agriculturists debt-free, Fadnavis said.
“Maharashtra Government has decided loan waiver of Rs 34,000 crores. We are waiving loans up to Rs 1.5 lakhs completely. Aware that the burden will fall on us, will cut our expenses. All ministers and MLAs will give one month salary to support loan waiver,” Fadnavis informed.
Chief Minister also asserted that those farmers, who have paid their loans regularly, will get 25 per cent loan return benefit.
“We have discussed with several stakeholders in this matter,” Fadnavis said.
However, Chief Minister also made it clear that farmers having an income of over 10 lakh per annum will not be benefitted in this loan waiving scheme.
Farmers in many parts of Maharashtra were on a warpath early this month, which disrupted the supply of vegetables and other essentials to cities, including Mumbai.
They were demanding a loan waiver, which was backed by all political parties. The stir was called off after the government gave them a firm assurance bringing in a comprehensive scheme to help the debt-pressed cultivators.
This comes on the back of recent loan waiver announcements by states such as Uttar Pradesh, Punjab and Karnataka worth Rs 36,359 crore, Rs 10,000 crore and Rs 8,165 crore, respectively. Earlier, soon after 2014 assembly elections, Telangana and Andhra Pradesh had announced loan waivers amounting to around Rs 17,000 crore and Rs 22,000 crore.
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A few days ago, credit rating agency Icra’s report has warned of a negative impact on financial conditions of states that are announcing loan waivers. The report said that funding of crop loan waivers would likely worsen the fiscal deficit and leverage levels of state governments. There is a significant risk that productive capital spending may end up being used to fund a portion of the loan waivers, impacting the growth of overall investment activity in the country, the report suggested.
Even without factoring in the amount needed to fund the crop loan waivers that some states have announced, Icra estimated the gross state development loans issued by the state governments to rise from Rs 3.8 lakh crore in FY17 to Rs 4.5 lakh crore in FY18.