On August 14, the Telangana government announced a loan waiver for farmers who borrowed less than Rs 1 lakh from banks. The government said that farmers who took loans up to Rs 99,999 until December 11, 2018, would be freed from the debt burden and that the government would pay this amount to the banks. Telangana Chief Minister K Chandrashekar Rao claimed that 9,02,843 farmers would benefit from the announcement. However, activists from the state say that the move may have come a little too late, as it only covers loans taken until 2018, which would have accrued substantial interest by 2023 which isn’t covered in the waiver.
KCR’s farm loan waiver promise was originally made just before the 2018 Assembly elections, in which the Bharat Rashtra Samithi (BRS, formerly TRS) won and returned to power for a second term after the formation of Telangana. He had promised a loan waiver for farmers who took crop loans of less than Rs 1 lakh. On August 2, KCR decided to complete the loan waiver promise at a review meeting on the agriculture sector, and directed officials to complete the process within 45 days, said a press release from his office.
“Though a farm loan waiver is a good move, this has come a little late. Many farmers who were expecting it to be done sooner have not paid the banks due to which their loans would have accrued more and more interest by 2023. So even if the state pays Rs 1 lakh for all the 9 lakh-odd farmers, what about the interest? All this has to be clarified by the government,” said Sreeharsha Thanneru, state coordinator for the Rythu Swarajya Vedika (RSV), a farmers’ rights organisation working in the two Telugu states of Telangana and Andhra Pradesh.
According to Sreeharsha, the average cost of farm expenses calculated by the RSV in Telangana for cotton cultivation is about Rs 36,000 per acre. “On average, a farmer cultivates at least two acres and that needs an investment of about Rs 70,000 for the year. Even if a farmer had taken a loan under Rs 1 lakh until December 2018, it would have accumulated interest at over 10% per year by now and gone up above Rs 1 lakh,” he explained.
When asked about this, officials from the state government confirmed that accrued interest on loans will not be taken into consideration for the loan waiver. “So, if someone had an outstanding loan of even Rs 1.10 lakh until December 11, 2018, then only Rs 1 lakh will be waived off. If there is interest that has accrued, then they will have to pay that themselves,” said an official from the Agriculture Department who did not want to be named.
M Ramakanth from Kisanmitra, an organisation that works to improve governance of agricultural support services, also told TNM that it remains unclear who exactly the 9 lakh beneficiaries of the loan waivers are. When asked about this, the government official said that the department has identified all the beneficiaries, but refused to say anything further.
"The loan waiver is useful for farmers but it should have come a long time ago. In the Adilabad district alone, cotton farmers are suffering because it's a very expensive crop to cultivate and hence they take loans. The waiving off of loans was promised in 2018 but the fact remains that if it's being waived off five years later. Now, 60-70% of the amount will go into farmers paying off the interest on their loans alone," he stated, concurring with Sreesharsha.
A political observer, who did not want to be named, said that a loan waiver at this point is more or less an electoral gimmick by the ruling Bharata Rashtra Samithi (BRS). “In the last election which KCR won, they announced the Rythu Bandhu scheme, under which land-owning farmers get Rs 10,000 per acre a year as a cultivation cost subsidy. He announced the Dalit Bandhu scheme in the run-up to the Huzurabad bye-poll which the BRS lost. Since announcing something like this close to the polls may violate the model code of conduct, it was done now,” he speculated.