The Hindu Business Line : 4 cr farmers to benefit from debt waiver scheme

Allocations
Rs 348 crore allocated for Rainfed Area Development Programme.
Rs 500 crore for micro irrigation covering 4,00,000 hectares under drip and sprinkler irrigation.

Our Bureau

New Delhi, Feb. 29 The Budget proposal to write-off loans to the tune of Rs 60,000 crore extended to farmers is seen as one single measure that could have a great impact on the country’s economy. Three crore small and marginal farmers and one crore ‘other’ farmers will benefit from the scheme, according to the Finance Minister.

PROPOSALS

The Finance Minister has proposed that all agricultural loans distributed by scheduled commercial banks, regional rural banks and cooperative credit institutions up to March 31, 2007 and overdue as on December 31, 2007 will be covered under debt waiver and debt relief scheme. For marginal farmers and small farmers there will be a complete waiver of all loans that were overdue on December 31, 2007 and which remained unpaid until February 29, 2008. He has also called for completing the implementation of the two schemes by June 30, 2008.

For other farmers, there will be a one time settlement (OTS) scheme for all loans that were overdue for the above period. Under the OTS, a rebate of 25 per cent will be given against payment of the balance of 75 per cent. Agricultural loans which were rescheduled and are restructured during 2004-06 as per the RBI guidelines will also be eligible for a waiver or an OTS on the same pattern. The total value of overdue loans being waived is estimated at Rs 50,000 crore and the OTS relief on the overdue loans is estimated at Rs 10,000 crore.

Two sides

In fact, there are two sides to the waiver. While a section views this as “perpetuation”, another feels it would prove to be productive. The waiver could help farmers to focus on sowing and tilling from the ensuing kharif season as they would free from worry of loans.

Also, they would be able to get back the possession of collaterals such as land and jewels, which could be repledged for taking fresh loans.

Right price denied

Questions could arise on farmers being indebted to private moneylenders but bankers say that in the last couple of years, farmers have been taking more loans from farmers and thus this waiver would really help them. The waiver could really given an impetus to farming and pave way for the much-needed farm productivity.

However, there is another section that feels that the Centre may have to resort to a similar step in four to five year’s time. Farmers, in the first place, are being denied right price to their products by the Centre in the name of containing inflation. Then, the Centre comes up with the waiver.

First, the consumer is subsidised at the farmer’s cost and now vice-versa. This section feels that price to farmers is the fulcrum of rural development and thus, the Centre should ensure better prices rather than resort to such measures.

Farmers generally seemed to have benefited from the crop insurance scheme and its extension to tobacco, chilli, ginger, turmeric, pepper and cardamom should prove beneficial to individual farmers. The higher allocation for irrigation is another positive factor that could help productivity in the longer term.

AIBP

To augment water resources, Mr Chidambaram said under Accelerated Irrigation Benefit Programme (AIBP), 24 major and medium irrigation projects and 753 minor irrigation schemes will be completed in this financial year. In 2008-09 the estimated outlay for the scheme is Rs 20,000 crore with a grant component of Rs 5,550 crore. Allocating Rs 348 crore to Rainfed Area Development Programme, he said priority will be given to those areas that have not been the beneficiaries of watershed development scheme. He also allocated of Rs 500 crore for the centrally sponsored scheme on micro irrigation, which will cover 4,00,000 hectares under drip and sprinkler irrigation. The Finance Minister, Mr P Chidambaram announced Rs 644 crore for the National Agriculture Insurance Scheme (NAIS). He announced that Rs 50 crore will be allocated to Weather Based Crop Insurance Scheme that is being implemented as a pilot scheme in selected areas of five States.

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