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MP, Chhattisgarh get farm loan waiver as Congress CMs take the helm

Ashok Gehlot, Kamal Nath, and Bhupesh Baghel took oaths for their offices

Archis Mohan & Sanjeeb Mukherjee  |  New Delhi 

Jyotiraditya Scindia with Shivraj Singh Chouhan and Kamal Nath at the latter's swearing-in in Bhopal. Photo: PTI
Jyotiraditya Scindia with Shivraj Singh Chouhan and Kamal Nath at the latter’s swearing-in in Bhopal. Photo: PTI

On Monday, within hours of taking oath, new Chief Minister of Madhya Pradesh Kamal Nath issued a government order that announced waiver of farm loans of up to Rs 200,000 taken until March 31 this year.

By late evening, Chhattisgarh's new CM Bhupesh Baghel announced waiver of loans of 1.66 million farmers of the state. He said it will cost the state exchequer Rs 61 billion. Baghel also announced minimum support price, or MSP, of paddy to be Rs 2,500 per quintal from the current Rs 2,050 (Rs 1,750 plus Rs 300 bonus).

Loan waiver within 10 days of forming governments was the key promise of the Congress in Chhattisgarh, Madhya Pradesh and Rajasthan. "CM Madhya Pradesh waives farm loans. One done. Two to go," Congress president Rahul Gandhi tweeted after Nath took the decision late afternoon. In Chhattisgarh, the Congress had also promised an increase in MSP.

The finer details of the waiver scheme and who all will be eligible for it will be determined based on the eligibility criteria set by the state government, the MP government's official order said.

On Monday, Congress CMs in these three states took their respective oaths of offices. In Jaipur, Governor Kalyan Singh administered oath of office to Ashok Gehlot as chief minister and Sachin Pilot, who will be designated deputy CM.

In Bhopal, Madhya Pradesh Governor Anandiben Patel administered oath of office to Nath, while Patel, who has the additional charge of Chhattisgarh, also administered oath of office to Congress's Baghel in Raipur as the CM of Apart from 57-year-old Baghel, legislators T S Singh Deo and Tamradhwaj Sahu, who were front-runners for the CM's post, were sworn in as ministers.

Bhupesh Baghel
Bhupesh Baghel


Opposition leaders attended the oath taking ceremonies of the three Congress chief ministers. Gandhi tweeted photographs from the swearing-in ceremony and of a bus in which top opposition leaders sat with him. The leaders included Nationalist Congress Party chief Sharad Pawar, DMK president M K Stalin, National Conference chief Farooq Abdullah and Loktantrik Janata Dal leader Sharad Yadav.

According to a September 2017 Reserve Bank of India estimate, to waive off crop loans up to Rs 100,000 per farmer, Rajasthan wound need Rs 219 billion. The study estimated Madhya Pradesh would need Rs 160 billion and Rs 30 billion.

With the new chief minister of Madhya Pradesh waiving off loans of up to Rs 200,000, the cost would escalate to twice of what the study had calculated. The fiscal situation of Rajasthan and Madhya Pradesh looks fragile, if we look at the latest data, and would make it relatively difficult for them, in comparison to Maharashtra and Karnataka, who have implemented similar waivers.

MP expects its fiscal deficit to soften marginally from 3.4 to 3.3 per cent. Despite no loan waiver by Shivraj Singh Chouhan in the state, the state government has spent heavily in the last two years on procurement of wheat, soybean, pulses, under the Bhawantar Bhugtan Yojana.

Rajasthan Chief Minister Ashok Gehlot, Deputy Chief Minister Sachin Pilot and Governor Kalyan Singh stand for the national anthem after the swearing-in ceremony, at Albert Hall in Jaipur, Monday, Photo: PTI
Rajasthan Chief Minister Ashok Gehlot, Deputy Chief Minister Sachin Pilot and Governor Kalyan Singh stand for the national anthem after the swearing-in ceremony, at Albert Hall in Jaipur, Monday, Photo: PTI
“Though the waiver would be staggered over three to four years, a more important question would be the set-off that it will create. The investments in agriculture will suffer as a result since the same money would now be channelized for loan waivers," Ashok Gulati, agricultural economist at Indian Council for Research on International Economic Relations (ICRIER), said.

The MP government order on loan waiver stated that the state government has "taken a decision to write off short-term crop loan of eligible farmers up to Rs 200,000, as on March 31, 2018, from nationalised and cooperative banks."


Six farmers were killed in police firing at Pipliya Mandi in Mandsaur in Madhya Pradesh during an agitation in June 2017. The incident had triggered farmers' protests across the country.

Congress sources said the other two governments will also fulfill the loan waiver promise within the next 10 days. In Rajasthan, the previous Vasundhara Raje government had waived off farm loans of 2.9 million farmers after protests.


First Published: Mon, December 17 2018. 21:56 IST
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