Maharashtra Govt Set to Waive up to Rs 2 Lakh Farmer Loans

Mumbai: The demand for complete loan waiver for farmers had taken centerstage during the recently concluded Maharashtra's Assembly elections. After heavy political parleys over the month, the state has in place a government with contradictory political parties. But all the three parties -- Shiv Sena, Nationalist Congress Party and Congress -- have agreed to loan waiver for farmers. They have also included this in the Common Minimum Programme (CMP) before formation of government. Now Chief Minister Uddhav Thackeray with leaders of NCP and Congress is taking stock of the financial situation of state and how that loan waiver could be declared soon. 

For the first time, the details of the possible loan waiver are coming out. NewsClick has learnt from sources that the Maha Vikas Aghadi (MVA) government is thinking on three major points. First, is a loan waiver up to Rs 2 lakh for all farmers. Crop loans and other agricultural loans will be covered by this. This is a very significant.

On Thursday, CM Thackeray, NCP chief and former agriculture minister Sharad Pawar sat for three hours with officers of finance, cooperative and agriculture department. Pawar, who presided over a Rs 80,000 loan waiver during 2008-09 under the Congress-led United Progressive Alliance’s tenure, had guided the officers on the details of the scheme. In the meeting, the leaders also decided to speak to Madhya Pradesh, Chhattisgarh and Rajasthan governments for the details of their loan waiver schemes. 

Earlier, the Bharatiya Janata Party (BJP) government in Maharashtra, led by Devendra Fadnavis has also announced loan waiver of Rs 34,044 crore. He announced this in June 2017 after farmers across the state went on strike for the first time in independent India. But this loan waiver had so many conditions attached, as also the process of claiming a waiver was complicated. This created a lot of discontent among farmers. So, the possible announcement by the MVA government to waive off loans up to Rs 2 lakh of all farmers will have a significant impact.

Another major point being considered by the MVA is giving guarantee of Rs 1 lakh of the loan. This means if any farmer has a loan of Rs 3 lakh, then Rs 2 lakh will be waived and the rest Rs 1 lakh will get government guarantee. This guarantee part was not there in the earlier loan waiver announced by the BJP-led government. Farmers will have to pay back the loan but the government guarantee will give them some breathing space from facing bank actions. 

The third point that NewsClick has learnt from sources is that the loan waiver would have a deadline of maximum three to six months. The process of the already announced loan waiver by the BJP government is not completed even today. A claim was frequently made by Fadnavis that Rs 18,000 crore out of Rs 34,000 crore had already been distributed. Fadnavis also claimed that the state government would continue the scheme till every farmer got benefits. But this scheme has created an impression that a large number of farmers are not covered, and hence are not getting benefits.

So, to avoid this impression, the MVA government will finish the implementation of the scheme within three-six months. "We are working on these lines. We don't want any delay after the announcement. Farmers should get benefits so that in the next season they are eligible for new crop loan," said NCP leader Ajit Pawar. 

With loan waiver scheme, the state government is also mulling an option on the lines of the 'Bhavantar Yojana' of Gujarat and Madhya Pradesh. After the government announced a minimum support price (MSP), many times farmers failed to get it. So, the difference between MSP and the actual price will be provided by state government.

Sources said this 'Bhavantar Yojana' was still in the primary stage of consideration. "This will cause a regular burden to state finances. So, the announcement will have to be made keeping the next few years in mind. Therefore, the options are being explored," said a senior finance officer. 

Maharashtra is currently debt ridden, burdened with loans worth Rs 6.71 lakh crore. The economic slowdown and its impact on tax collections are making the situation more complicated. So, the new state government will have to think hard about these serious hurdles before making any announcement.