Rabi sets in, but loan waiver gives zero relief to farmers

BENGALURU: More than three months after chief minister Siddaramaiah announced a Rs 8,165 crore crop loan waiver, the government has not released a single rupee and several banks are refusing repayment by farmers. This will not only increase the interest burden but also affect farmers’ chances of availing fresh loans and crop insurance.

The loan cycle is typically for one year. Up to 12 months, the loan is interest-free as the Centre (3%) and the state (4%) take the burden of the 7% interest that is to be levied. But, from the 13th month, the farmer has to pay 7% interest.

Now, not only will many of these farmers waiting for the waiver money be paying the interest, but there is a clause that says that until old loan accounts are closed and renewed they cannot borrow afresh. The fact that farmers cannot borrow afresh because of pending loans will also impact their crop insurance for the rabi season, which may have begun with some hope with most districts receiving rain.

“Generally, farmers avail fresh loans and pay the crop insurance premium for notified crops using a portion of this. If the loans get delayed they will not be able to pay the premium, which will affect them if rabi also fails,” said Rythu Swarajya Vedika national convenor

Ravi Kanneganti

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On June 21, Siddaramaiah announced the scheme, under which 22.27 lakh farmers who had borrowed money up to June 20, 2017, were to get a waiver of up to Rs 50,000. The total loan exposure of cooperative banks in the state is Rs 10,600 crore, and the government’s waiver was to take care of 77% of this.

Of the 22.27 lakh, 11 lakh farmers — who mostly availed loans before the announcement of the waiver — have repaid their loans despite a bad season and got their accounts renewed. The remaining are yet to get their accounts renewed, and have now come under the interest regime. The last date to pay up premiums for the rabi crop insurance is November 15, failing which they will be deprived of the same.

And, even as many of them are willing to repay the loans by themselves, banks are not accepting their payment. Kolar-Chikkaballapura District Cooperative Bank chairman Bylahalli M Govindegowda confirmed this to TOI, saying, “The government has announced a scheme and we are waiting for release of funds which is why we are not accepting money from farmers.”

G S Ramana Reddy, CEO, Karnataka State Cooperative Apex Bank Limited, which is the nodal agency to implement the scheme, said the primary societies have been asked to prepare the bills to be forwarded to the finance department, which will in turn release the funds.

The government, however, will not be releasing all the funds together. B S Harish, additional registrar of co-operative societies (credit), said: “The plan is to do it in phases and in the first phase, we have sought bills for Rs 1,388 crore.”

Refinancing Problem

Besides being faced with the aforementioned problems, farmers are also likely to be impacted by the lack of resources with co-operative banks.

More than one cooperative banks told TOI that their ability to refinance has been impacted by the new policy of the National Bank for Agriculture and Rural Development (Nabard). “There is already in decrease in deposits after November last year and several loans are pending. Now, Nabard has decreased its contribution from 55% (of the farm loans) to just 40%,” Govindegowda said.

M I Ganagi, Nabard’s chief general manager (Karnataka), said it is a deliberate policy decision as cooperative banks are expected to be self-reliant depending on their own resources.


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