The Telangana government on Tuesday issued a government notification waving all agricultural farm loans up to Rs 1 lakh of all farmers in the state. All loans taken by farmers in the state as on March 31, 2014, have been waived.
The government, in its order, stated that crop loans are being waived to break the cycle of farmers taking credit from money lenders to pay loans to banks. The crop loan waiver scheme will cover short-term loans taken against gold by scheduled commercial banks, cooperative credit institutions including urban cooperative banks and regional rural banks.
All crop loans sanctioned or renewed on or after April 1, 2014, and outstanding as on December 11, 2018, are eligible for the crop loan waiver scheme, the government order stated. The crop loan waiver is expected to benefit around 40.5 lakh farmers and an estimated total crop loan amount of Rs 30,000 crore, notwithstanding the interest amount of Rs 2,000 crore.
In Telangana, about 60% of the population residing in rural areas depend on farming animal husbandry, dairy, fisheries and other agricultural related activities. The agriculture sector contributed to 18% of the state’s GDP (gross domestic product) in the year 2018-19.
Earlier, speaking in the Assembly in September 2019, Telangana Chief Minister K Chandrasekhar Rao had said that the state government would pay the money directly to the farmers through instalments. The Chief Minister hoped that the move would enable farmers to take fresh loans from banks for new agricultural activities.
The crop loan waiver was an election promise of the Telangana Rashtra Samithi (TRS) during the 2018 elections. The New Indian Express reported that fulfilling this promise would mean the state paying the banks around Rs 7,500 crore in the last quarter (January to March) of the fiscal year 2020.
The state had initially set a deadline of December 11, 2018, for the crop loan waiver schemes, but it got delayed due to fund crunch. The delay pushed up the cost of the scheme with respect to loan premiums the state now has to pay the banks.