Modi government initiates discussion on farm loan waiver

New Delhi: Finance Minister Arun Jaitley on Friday initiated discussions on farm loan waiver scheme with the agriculture ministry and some states in line with the BJP's promise at the time of UP elections.

Agriculture Minister Radha Mohan Singh, Maharashtra Chief Minister Devendra Fadnavis and Tamil Nadu Finance Minister D Jayakumar were among those who met Jaitley to discuss various issues concerning farmers including the loan waiver scheme.

"We...Explained the problems being faced by farmers of Maharashtra. There are 1.8 crore farmers who had taken 1.05 lakh crore loans. Of this, loans of 31,000 farmers are overdue amounting to Rs 30,500 crore," Fadnavis said after the meeting.

In case the debt is not serviced, then these farmers will be out of institutional credit, he said, adding that the NDA government has been trying to increase capital expenditure in the agriculture sector including drought relief.

"We have requested the government of India to design a scheme so the debt of 31,000 farmers can be waived...The government of Maharashtra would participate in the scheme as per the fiscal space of the state," he said.

The Finance Minister has assured that the Centre is solidly behind the farmers in the country, he added.

He also assured that the central government would consider their demands positively and come up with some scheme to help farmers in distress.

Fadnavis said that if the state government provided relief from its coffers, it would not in a position to make capital investments in the agriculture sector even as the fiscal deficit would increase.

Tamil Nadu is reeling under severe drought due to rainfall deficit of nearly 62 per cent owing to monsoon failure. The state has been demanding relief from the central government.

Singh had yesterday said the newly-elected BJP government in Uttar Pradesh will waive loans of farmers in the state and the financial burden would be borne by the Centre.

Bankers have already expressed concern over farm debt waiver scheme saying this kind of schemes disrupt credit discipline among borrowers.

Expressing reservations over farm loan waiver schemes, State Bank of India Chairperson Arundhati Bhattacharya had said such sops may disrupt credit discipline among borrowers.

"We feel that in case of a (farm) loan waiver there is always a fall in credit discipline because the people who get the waiver have expectations of future waivers as well. As such future loans given often remain unpaid," Bhattacharya had said earlier this week.

The delegation led by Fadnavis which met Jaitley and Radha Mohan Singh comprised Union Minister Subhash Bhamre and state Ministers Pandurang Fundkar, Subhash Desai, Divakar Raote, Subhash Deshmukh, Eknath Shinde, Babanrao Lonikar, Ramdas Kadam and MLAs Sanjay Kute, Prashant Bamb and Vijay Auty.

Shiv Sena, BJP's alliance partner, has supported opposition's demand of loan waiver for farmers in Maharashtra.

The opposition Congress and NCP have said they will not allow the state legislature to function during the ongoing session if loan waiver is not announced.

Meanwhile, Congress leader and member of the Legislative Council Sanjay Dutt said that Prime Minister Narendra Modi didn't meet the state delegation, which was "insensitive".

Jaitley too gave no concrete assurance, Dutt said in a tweet, adding that the Prime Minister had promised loan waiver for Uttar Pradesh farmers but ignored a just demand of farmers from Maharashtra, which was a discrimination.