KCR, Naidu face farm loan test

Threat of farmers being denied fresh farm loans looming if the exisiting ones are not cleared

Telangana Chief Minister K Chandrasekhar Rao, or KCR, and chief minister-designate of residual Andhra Pradesh N Chandrababu Naidu, who is taking charge on June 8, have both started work on the issue of farm loan waiver.

With the threat of farmers being denied fresh loans looming, for the ensuing kharif season unless the existing one is cleared, KCR will discuss the issue at the first state level bankers committee meeting on Wednesday.

Naidu, too, is discussing methods to implement the scheme with experts and officials.

He had promised that his first signature would be on a file related to the waiver of farm loans. To keep his word, Naidu is eager to make an announcement on the same, the day he takes charge as the chief minister, according to officials.

Meanwhile, the finance departments of both the states have begun the back-of-the-envelope calculations of the total liability.

The exercise, underway at the department level, is primarily directed towards ways to reduce the financial liability since the total loan outsanding, particularly in residual Andhra Pradesh, is too high to be handled by a state government.

“Guidelines such as not to cover multiple loans taken by the members of a single family under the loan waver scheme will further help reduce the liability. However, we are finding it difficult to receive thebreak-ups from banks,” a senior government official told Business Standard.

The total farm loan outsanding as on March 2014 stood at Rs 13,7176 crore in the undivided Andhra Pradesh, which includes Rs 14,204 crore loans extended to the self help groups(SHGs) since the two leaders also promised to waive off SHG loans.

As a first step, the officials reduced this liability to Rs 81,420 crore after taking into account only those loans with a limit of Rs 1 lakh.

It may be recalled that KCR had promised to waive off farm loans of up to Rs 1 lakh only while Naidu remained ambiguous on the upper limit.

According to the official data, the loans with an upper limit of Rs 1 lakh were about Rs 51,300 crore of the total Rs 87,612-crore outstanding in residual Andhra Pradesh and the same was Rs 30,120 crore out of Rs 49,564-crore outsanding in Telangana state.