Joining the states that recently wrote off farm loans, Karnataka CM Siddaramaiah announced a waiver of crop loans and short-term loans of up to Rs.50,000 availed from agricultural cooperative banks in the state. The governments of UP , Maharashtra and Punjab have already announced waivers to quell the growing demands of distressed farmers following a crash in prices of farm produce.
“While some farmers have got interest-free loans of Rs.25,000, others have availed up to Rs.3 lakh. We'll waive off loans up to Rs.50,000, irrespective of the total amount,“ Siddaramaiah said. “I want the Centre to waive off farmer loans availed from nationalised and commercial banks,“ Siddaramaiah said in the legislative assembly , putting the onus on the Centre to do its part for farmers. The CM said Karnataka was the first state in the country to transfer input subsidies directly to bank accounts of farmers.
The loan waiver will benefit 22,27,506 farmers who have taken loans worth Rs.10,736 crore from cooperative banks.This puts a burden on Rs.8,165 crore on the state exchequer.
The waiver, seen as a bonanza for farmers reeling under consecutive drought, is expected to win their goodwill towards the Congress government which is heading for elections in early 2018.
Moreover, Karnataka's move assumes significance as it comes in the backdrop of two political developments: One, Union finance minister Arun Jaitley's statement that the Centre will not fund any waiver of farm loans by states; Two, Congress vice-president Rahul Gandhi expressing his solidarity with the farming community by demanding Prime Minister Narendra Modi waive farm loans.