Punjab Cabinet clears crop loan waiver scheme

Chandigarh, September 20

The Punjab Cabinet on Wednesday gave its approval to notify the crop loan waiver scheme announced by Chief Minister Captain Amarinder Singh in the state assembly in June this year.

Besides taking over the entire eligible loan amount of the farmers covered by the debt waiver scheme, the government has decided to also take over the outstanding interest of farmers from April 1, 2017 till the date of notification, which will lead to an additional Rs 400 crore benefit to the farmers.

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The entire amount would be defrayed to the banks in a phased manner, except for the cooperative credit institutions, an official spokesperson said after the cabinet meeting, adding that the proposed notification will pave the way for the state government to take up the issue of settlement of loan with respective banks as a one-time settlement.

The crop loan waiver scheme, based on the recommendations of an expert group headed by eminent economist Dr T Haque, will directly benefit nearly 10.25 lakh farmers. The Chief Minister had in June announced waiver of the entire crop loans (up to Rs 2 lakh) of all small and marginal farmers (up to 5 acres) and a relief of Rs 2 lakh to the remaining marginal farmers irrespective of the amount of loan.

The notification envisages that in case of marginal farmer (less than 2.5 acres) the entire eligible amount of those farmers who have total outstanding crop loan liability up to Rs 2 lakh shall be provided as debt relief and in case of eligible amount of more than Rs 2 lakh, only Rs 2 lakh shall be provided as debt relief.

In case of small famers (from 2.5 acres to less than 5 acres), the entire eligible amount of those farmers who have total outstanding crop loan liability up to Rs 2 lakh, shall be provided as debt relief.

The debt waiver scheme would cover crop loan disbursed to farmers in the state by scheduled commercial banks, cooperative credit institutions (including urban cooperative banks and regional rural banks, collectively called as the 'lending institutions').

The scheme shall come into force from the date of its notification in the official gazette.

According to the notification, crop loan means a short term production loan given in connection with the raising of crops which is to be repaid within 6 to 12 months.

It will include working capital loan, extended to marginal and small farmers.

In the case of a farmer who has taken loans from two separate lending institutions, the first priority shall be given to the cooperative institutions and second to the Public Sector Banks and third to the commercial banks in that order. The amount eligible for debt relief shall comprise the outstanding liability under crop loan (principal and interest) as on March 31, 2017.

The interest outstanding from April 1, 2017 till date of notification shall be additional. As per data collected from state-level bankers committee, there are about 20.22 lakh bank accounts with an outstanding crop loan of Rs 59,621 crore as on March 31, 2017.

It is estimated that about 10.25 lakh farmers will be provided debt relief under this scheme. For this purpose, bank branch wise lists of eligible small and marginal farmers shall be prepared under the supervision of the Deputy Commissioner of the district concerned.

The funds shall be provided to the DC's and each farmer shall be issued a dept relief certificate by the concerned bank branch after crediting the relief amount in his account.

In case of multiple accounts, a total waiver up to Rs 2 lakh shall be provided as per eligibility with the priority being given to cooperative institutions, public sector banks and private banks in the same order.

A district-level bankers' meeting will be convened by the Deputy Commissioner and district-wise details of loan waiver bank-wise, farmer-wise will be recorded and sent to Director Agriculture, who will release the amount to the Deputy Commissioner concerned for settlement of accounts of eligible farmers.

The state agriculture scenario is quite dismal and facing a crisis both in terms of its economic and environmental sustainability. The increasing costs of inputs coupled with marginal increase in minimum support price have contributed to squeezing the margins of the farmers. As per studies carried out by Punjab State Farmers’ Commission and Punjabi University, Patiala, the debt per household which was about Rs 1.79 lakh in 2005-06 had increased to Rs 4.74 lakh in 2014-15.