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The Telangana government issued orders on Tuesday waiving farm loans to an extent of Rs 1 lakh each, which is estimated to cost the state exchequer Rs 19,000 crore.
The waiver is in accordance with the electoral promise made by the ruling Telangana Rashtra Samithi. The orders were issued according to a decision taken to this effect by the state Cabinet late on Monday night.
According to an official press release, the Cabinet has decided to "impress upon" the Reserve Bank of India (RBI) to consider other districts also for loan reschedulement "in view of the wide spread damage to crops in the last five years". It had directed the state finance secretary to rush to Mumbai to discuss the matter with the RBI.
Last week, the RBI had allowed banks to extend the loan restructuring facility to crop loan borrowers in about 100 mandals across three districts in Telangana. The new state has a total of 475 mandals and the state government has sought reschedulement of crop loans in about 415 mandals.
