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LATEST NEWS UPDATES | Will farm loan waivers hurt the finances of Tamil Nadu and Uttar Pradesh? -Sruthisagar Yamunan

Will farm loan waivers hurt the finances of Tamil Nadu and Uttar Pradesh? -Sruthisagar Yamunan

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published Published on Apr 11, 2017   modified Modified on Apr 11, 2017
-Scroll.in

While officials say waivers could jeopardise allocation for other key sectors, farmer unions and economists feel it is a necessity given the farming crisis.

Developments in three states over the past week have brought the debate on the waiver of farm loans back under the political spotlight.

In Uttar Pradesh, the newly-elected Bharatiya Janata Party government under Chief Minister Adityanath announced on Wednesday that it would write-off crop loans of up to Rs 1 lakh for about 21.6 million small and marginal farmers.

In Tamil Nadu, on April 4, the Madras High Court directed the state government to waive all farm loans accessed through cooperative banks, irrespective of the size of the farmer’s landholdings. The government had waived such loans of small and marginal farmers last August, but had left out large farmers as a matter of policy. The court took the view that this classification was arbitrary in the context of loans, and wanted the big farmers to get the write-off benefits too.

This court order will put an additional burden of Rs 1980.33 crores on the state exchequer. Tamil Nadu had only recently released drought relief of about Rs 2,300 crores to farmers, crediting the amount directly into their bank accounts.

In Maharashtra, the Devendra Fadnavis government said on April 5 that it was studying the Uttar Pradesh model to see if a similar loan waiver scheme was possible in the state, after the Opposition said it would continue to hold agitations till farmers got a reprieve.

While the farming community looks at loan waivers as a necessary short-term measure to tide over the crisis caused by climatic conditions such as monsoon failure, officials see such schemes as a big burden on state finances. In states like Tamil Nadu, where the state debt situation is already precarious, loan waivers may affect allocations to key schemes in other sectors, such as education and health.

Reserve Bank of India Governor Urjit Patel on Thursday expressed his displeasure at the spate of loan waiver announcements in different states.

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Scroll.in, 10 April, 2017, https://scroll.in/article/833999/will-farm-loan-waivers-hurt-state-finances-in-tamil-nadu-and-uttar-pradesh


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