In an apparent attempt to reap the benefits without sowing ahead Gurdaspur bye-elections, the Punjab Cabinet on Wednesday cleared the proposal of waiving crop loans. Though, the decision will only be implemented only after the notification is issued which either needs election panel’s permission or the completion of by-poll process.
Dubbing it as a political gimmick, the Opposition was quick to criticise the Government by saying that crop loan waiver had been announced for the tenth time since the Government came to power less than 200 days back even as its coffers are “empty”.
Crop loan waiver was the major pre-poll promise of the Congress party that catapulted back in power after a decade long gap.
With the election code of conduct in place barring the ruling party from making any announcements to take undue advantage, the Government is required to seek the Election Commission’s (EC) permission to notify the waiver.
In another case, the government would have to wait for the completion of poll process, after counting of votes on October 15.
The Cabinet, in its decision, approved to notify crop loan waiver scheme. Besides, it has decided to take over the outstanding interest of farmers from April 1, 2017, till the date of notification — a decision expected to put an additional Rs 400 crore burden on the state exchequer, which is already facing a crunch.
The government, in its first budget, has allocated Rs 1,500 for the crop loan waiver scheme.
To implement its promise, the State Government has all along been pressing the Centre to relax the state’s borrowing limit under the Fiscal Responsibility and Budget Management (FRBM) Act to enable it to take Rs 10,000 crore to write off farm loans.
The issue, at several times, had been raised by the Chief Minister Capt Amarinder Singh and Finance Minister Manpreet Badal with the Prime Minister Narendra Modia and the Union Finance Minister Arun Jaitley — but to no avail.
Not only the acceptance of Punjab’s demand would set a bad example for other states seeking loan waiver, it would also harm BJP’s prospects in Gurdaspur bye-election which is going all out to retain its seat, vacated after the death of its sitting MP Vinod Khanna in April this year.
The Government has planned to start crediting money to farmers’ accounts as and when banks provide the data on pending loans.
A senior Government official told The Pioneer that the government would first use the budgetary allocation of Rs 1,500 crore, and in the meanwhile, was hopeful that the Centre would also accept the state’s demand to relax borrowing limit.
THE SCHEME
The crop loan waiver scheme, based on the recommendations of an expert group headed by eminent economist Dr T Haque, will directly benefit nearly 10.25 lakh farmers across the state.
Capt Amarinder, in June, had announced waiver of the entire crop loans (up to Rs two lakhs) of all small and marginal farmers (up to five acres) and a relief of Rs two lakh to the remaining marginal farmers irrespective of the amount of loan.
In case of marginal farmer (less than 2.5 acres), the entire eligible amount of those farmers who have total outstanding crop loan liability up to Rs two lakh shall be provided as debt relief and in case of eligible amount of more than Rs two lakh, only Rs two lakh shall be provided as debt relief.
In case of small famers (from 2.5 acres to less than five acres), the entire eligible amount of those farmers who have total outstanding crop loan liability up to Rs two lakh, shall be provided as debt relief.
The debt waiver scheme would cover crop loan disbursed to farmers in the State by scheduled commercial banks, cooperative credit institutions (including urban cooperative banks and regional rural banks, collectively called as the ‘lending institutions’.
AMOUNT TO BE DEFRAYED TO BANKS
As per the cabinet decision, the entire amount would be defrayed to the banks in a phased manner, except for the cooperative credit institutions. Spokesperson said that the proposed notification will pave the way for the state government to take up the issue of settlement of loan with respective banks as a one-time settlement.
THE EXECUTION
To implement the scheme, bank branch wise lists of eligible small and marginal farmers shall be prepared under the supervision of the Deputy Commissioner of the concerned district. The funds shall be provided to the DCs and each farmer shall be issued a debt relief certificate by the concerned bank branch after crediting the relief amount in his account.