Karnataka CM Basavaraj Bommai may announce debt relief panel

BENGALURU: Following pressure to waive farm loans, given the huge crop loss caused by excessive rain in November 2021, chief minister Basavaraj Bommai is said to be working on a permanent policy to address farmers’ distress. It is expected to be announced in his maiden budget in March.
Officials from the agriculture and cooperation departments said the government is considering enacting a debt relief bill outlining guidelines for issuance of crop loans, their recovery, the conditions under which interest component is waived, and when the government can take over the entire burden of loan and repay on behalf of farmers.
The government is also expected to set up a permanent debt relief commission to monitor enforcement of the law, on the lines of Kerala model.
“Waiving loans year after year is an ad-hoc approach that is impractical considering the financial implications. And the present financial situation, hit by the Covid slowdown, is not conducive to having such measures,” said agriculture minister BC Patil. “Instead, we want a permanent policy and it will be part of the 2022-23 state budget.”
Cooperation minister ST Somashekhar said he has asked department officials for ideas that can be formulated into policy, and the debt relief commission is one such proposal on the cards.
“We will convene a series of meetings in the first week of February and prepare a budget wishlist for the farm sector that will be presented to the chief minister,” he said.
What previous regimes did
While the JD(S)-Congress government headed by HD Kumaraswamy had, in the 2018-19 budget, announced a scheme to waive crop loans running up to Rs 1 lakh, benefiting 26 lakh farmers, Congress’ Siddaramaiah had, in 2017, waived loans running up to Rs 50,000 taken by 22.3 lakh farmers.
Bommai, who also holds the finance portfolio, is already under pressure to announce a similar populist measure as his budget will be the last full-fledged one before the 2023 assembly elections. He is expected to present an interim budget for 2023-24 in March 2023 before the end of his government’s tenure. Further, it also comes ahead of zilla and taluk panchayat polls this year. While Kumaraswamy’s scheme cost the exchequer Rs 29,000 crore, Siddaramaiah’s cost Rs 8,165 crore.
Somashekhar said the present government cannot afford another scheme like this. “Instead, we will disburse the pending payment of loan waiver scheme of the previous government. About 53,000 farmers are yet to get loan waiver to the tune of Rs 350 crore and we will clear it this time,” he said. GC Bayya Reddy, president, Karnataka Rajya Prantha Raitha Sangha, said the Kumaraswamy government had enacted the Karnataka Debt Relief Act in 2019 as a temporary measure to waive loans, but the state needs a permanent policy.
Somashekhar said the farm loan target was increased to Rs 20,810 crore in 2021-22 from Rs 14,500 crore in 2020-21 and the government’s priority is to ensure deserving farmers get loans and official assistance. “Measures like enacting the Debt Relief Act and setting up a relief commission will help,” he said.