Andhra to take loans on future income to fund waiver scheme

Cabinet has decided to cap loan waiver benefit to Rs 1.5 lakh per family while applying the scheme to crop as well as gold loans across the board

In an unusual development, the Andhra Pradesh government has decided to pool in money for the farm loan waiver scheme through the sale of seized red sanders wood, by availing of loans on future income on sale of river sand and other minerals besides levying a ‘farmers welfare cess’ on liquor and transport revenues.

The government said this was necessary to keep its word on loan waiver since the available finances were not even sufficient to fund the regular programmes.

The Cabinet, which met here today, approved these steps to fund one of the expensive electoral promises of the ruling Telugu Desam Party.

The Cabinet, however, decided to cap the loan waiver benefit to Rs 1.5 lakh per family while applying the scheme to crop loans as well as gold loans across the board.

Speaking to the media after a four-hour long meeting, chief minister N Chandrababu Naidu said his government had decided to go ahead with the scheme owing to the distress situation faced by farmers and other rural households in the state.

“The committee constituted on loan waiver has recommended to cap the loan waiver benefit to Rs 1 lakh per family while we have decided to enhance the limit to Rs 1.5 lakh. This decision will bring an additional Rs 8,000 crore burden on the government exchequer,” Naidu said.

According to the chief minister, over Rs 42,000 crore loans qualify under the present scheme.

These include Rs 30,000-35,000 crore of farm and gold loans, about Rs 7,500 crore taken by women self-help groups (SHGs) and another Rs 400 crore towards waiver of loans taken by weavers and other artisans. However, the net liability based on the loan benefit cap is yet to be worked out, he said. The government will give Rs 1 lakh to each SHG.

Even with the Rs 1.5 lakh cap,  loan dues of 96.27 per cent of over 8 million borrowers will be completely waived while the remaining 3.73 per cent will also enjoy waiver of up to this limit, Naidu said. While refusing to give any time line for its implementation, Naidu simply said they would try to waive loans as and when the government gets the money through the above measures.

On the loan reschedulement,  he said the Reserve Bank of India (RBI) had not responded to their request for a seven-year restructuring and instead indicated its willingness for a period of three years.

The RBI had taken a tough stand on the loan waiver promises of AP and Telangana governments and even sought information regarding their funding plans before considering their immediate request for restructuring.  

In another decision, the Cabinet approved a resolution requesting the Centre to direct the Telangana government to cooperate in completing the joint counselling and admission process for the students of both the states into professional colleges.