UP goes for Rs 15-bn crop loan waiver after Cong move in MP, Chhattisgarh

Relief aimed at farmers who could not benefit under the flagship scheme last year

Amid the speedy announcement of crop loan waivers by newly-elected Congress governments in Madhya Pradesh and Chhattisgarh, the Uttar Pradesh government has sanctioned a budget of almost Rs 15 billion to waive off crop loans of those farmers who could not avail of the scheme last year. 

Soon after coming to power, the Adityanath government had announced a waiver for crop loans taken by small and marginal farmers totalling Rs 360 billion. It was targeted to benefit almost 8.6 million farmers, subject to the individual ceiling of Rs 100,000.

Later, about 6.6 million small and marginal farmers were found eligible under the scheme after weeding out duplication of names in the bank records. However, by the end of March 2018, only about 3.6 million farmers were provided waivers totalling about Rs 220 billion. The beneficiaries also comprised about 126,000 farmers whose bank accounts were re-energised by writing off their bad debts. 

Since a large number of agriculturists could not avail of the benefits during 2017-18, owing to a multitude of factors, the government later extended the scheme to the current financial year and allocated about Rs 40 billion in the Annual Budget as well. The state government had advised farmers to apply afresh. Subsequently, more than a million small and marginal farmers registered their online complaints. 

In the backdrop of a rejuvenated Congress raising the pitch over farm loans, the ruling Bharatiya Janata Party (BJP) does not want to give leeway to the Opposition to corner it on the contentious issue, especially since the winter session of the UP legislature is underway and the Supplementary Budget is likely to be tabled on Wednesday on the floor of the House. 

According to sources, the Adityanath government has already waived crop loans worth more than Rs 246 billion pertaining to over 4.4 million small and marginal farmers.

The flagship loan waiver scheme was applicable to farmers who had taken crop loans during 2015-16. The total relief of Rs 360 billion comprised a projected loan waiver of about Rs 307 billion, with the remaining Rs 53 billion aimed at providing succour to other categories of farmers by writing off non-performing assets (NPA) accumulated by banks in the agricultural sector.

However, the scheme had also come under a cloud following media reports that farmers were being given cheques of amounts less than Rs 10.

Of the total 23 million farmers in UP, 92.5 per cent, or 21.5 million, fall in the small and marginal segments. At the end of March 2016, total agricultural loan outstanding in UP stood at Rs 1.21 trillion, which increased to Rs 1.30 trillion at the end of March 2017. Thus, the projected crop loan waiver of Rs 307 billion was roughly 25 per cent of the total outstanding agricultural loan of Rs 1.21 trillion incurred during 2015-16.