Maharashtra Chief Minister Devendra Fadnavis and Revenue Minister Chandrakant Patil met with Nationalist Congress Party (NCP) leader Sharad Pawar in Delhi on Friday to discuss the farm loan waiver. The Maharashtra government on Saturday announced a loan waiver of 34,000 crore which will benefit 40 lakh farmers in the state. Farmers who have taken loans before July 2016 will be the beneficiaries.
“We have decided to write off loans upto 1.5 lakh rupees of individual farmers,” Fadnavis confirmed at a press conference.
40 lakh farmers are to become debt-free due to this decision and further incentive will be given to thos farmers who have paid of their loans, so as to ensure that all are covered by this incentive.
Farmers who have not defaulted on their loans will get 25 percent of it back.
“About 89 lakh farmers will be benefitted by the decision,” Fadnavis said.
The decision to do so comes after the violent farmer protests that engulfed Maharashtra, Madhya Pradesh and other states.
“Maharashtra has given the biggest loan waiver… The package is larger both in terms of amount and the number of beneficiaries compared to Uttar Pradesh, Karnataka, Punjab and Andhra Pradesh,” Patil said after the meeting.
Shiv Sena Chief Uddhav Thackeray on June 14 had warned the Maharashtra Government that it would be forced to take a “big step” if farm loan waivers, as promised by state Chief Minister Devendra Fadnavis, is not implemented by July.
Punjab Chief Minister Capt. Amarinder Singh had on June 19 announced a total waiver of entire crop loans for small and marginal farmers in Punjab.
The loan waiver will go 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, thus paving the way for eventual total waiver of agricultural debts to implement another major poll promise of the ruling party.
A day after Punjab approved waiving of loans for nearly 10 lakh farmers in the state, Finance Minister Arun Jaitley on June 20 said that the Centre is not considering any proposal for farm loan waiver.
“There is no such proposal. We have got FRBM Act and fiscal deficit target, we intend adhering to it,” he said here.
Jaitley had stated earlier that the central government will not partake in states’ fiscal leverage in waiving farm loans, and made it clear that the cost has to be borne by the states.
Reserve Bank Governor Urjit Patel has already warned of fiscal situation likely to be going out of hands if states keep doling out funds and may stoke inflationary expectations.
RBI keeps a close tab on retail inflation to decide on its monetary policy tools such as the repo rate – at which it
lends to banks.