Lok Sabha Question No. 2430 (UNSTARRED), answered on 2018-01-02
Subject: Demand of Loan Waiver
Ministry: AGRICULTURE AND FARMERS WELFARE
Asked by: RAJU ALIAS DEVAPPA ANNA SHETTI

## GOVERNMENT OF INDIA MINISTRY OF AGRICULTURE AND FARMERS WELFARE DEPARTMENT OF AGRICULTURE, COOPERATION AND FARMERS WELFARE

## LOK  SABHA UNSTARRED QUESTION NO. 2430

TO BE ANSWERED ON THE 2 ND  JANUARY, 2018

## DEMAND OF LOAN WAIVER

## 2430.      SHRI RAJU SHETTY:

Will the Minister of AGRICULTURE AND FARMERS WELFARE कृ ष एवं कसान कयाण मंी be pleased to state:

- (a) whether the Government is aware that farmers of Tamil Nadu are protesting in Delhi for many days demanding of loan waiver; and
- (b) if so, the details thereof and the action taken by the Government in this regard?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF AGRICULTURE AND FARMERS WELFARE

कृ ष एवं कसान कयाण मंालय म राय मंी (SHRI  PARSHOTTAM RUPALA)

- (a) & (b): As  learnt  from  various  media  reports  during  the  past  few  months,  farmers  of Tamil Nadu are protesting in Delhi demanding loan waiver.

The  Government  is  not  in  favour  of  loan  waiver,  as  it  negatively  impacts  credit  and recovery climate and has severe systemic consequences. However, towards reducing the debt burden of farmers and increasing availability  of  institutional  credit  to  farmers,  following  major initiatives have been taken:

- i. With  a  view  to  ensuring  availability  of  agriculture  credit  at  a  reduced  interest  rate  to farmers, the Government implements the Interest Subvention Scheme (ISS) under which short term crop loans up to Rs. 3.00 lakh are made available to farmers at a subvented interest rate of 7% per annum. Further, additional subvention of 3% is provided on prompt repayment,  thereby  reducing  the  effective  rate  of  interest  to  4%  p.a.  for  such  farmers. Some State Governments in fact also provide additional interest subvention, reducing the effective interest burden on short term crop loans to zero.
- ii. Government sets annual target for the flow of credit to the agriculture sector. Banks have been consistently surpassing the annual target.
- iii. Reserve Bank of India (RBI) has issued Priority Sector Lending Guidelines (PSL), which mandate all Domestic Scheduled Commercial Banks to earmark 18% of their Adjusted Net Bank Credit (ANBC) or Credit Equivalent amount of Off-Balance Sheet Exposure (OBE), whichever  is  higher,  as  on  the  corresponding  date  of  the  previous  year,  for  lending  to Agriculture.

- iv. As per PSL guidelines loans to distressed farmers to repay non-institutional lenders are eligible under priority sector. Besides loans to stressed persons (other than farmers) not exceeding Rs. 1,00,000/- per borrower to repay their debt to non-institutional lender are also eligible for the purpose of priority sector lending by banks.
- v. In order to ensure that all eligible farmers are provided with hassle-free and timely credit for  their  agricultural  operations,  the  Government  has  introduced  the  Kisan  Credit  Card (KCC) Scheme, which enables them to draw cash to purchase agricultural inputs such as seeds,  fertilisers,  pesticides  as  well  as  meet  other  agricultural  and  consumption  needs. The KCC Scheme has since been simplified by providing the farmers with ATM enabled debit card based on one-time documentation and built-in cost escalation in the limit, etc.
- vi. To  bring  small,  marginal,  tenant  farmers,  oral  lessees,  etc.  into  the  fold  of  institutional credit, Joint Liability Groups (JLGs) have been promoted by banks. The Government also promotes  formation  of  Farmer  Producer  Organisations  (FPOs)  in  a  big  way  to  enable farmers  to  leverage  economies  of  scale,  not  only  for  agricultural  inputs  but  also  for enhanced marketing opportunities.
- vii. Banks  have  been  advised  by  RBI  to  waive  margin/security  requirements  of  agricultural loans upto Rs.1,00,000/-, vide RBI's circular dated 18 th June, 2010.
- viii. RBI  has  issued    directions  for  Relief  Measures  to  be  provided  by  respective  lending institutions in areas affected by natural calamities which, inter alia, include, restructuring/rescheduling  of  existing  crop  loans  and  term  loans,  extending  fresh  loans, relaxed  security  and  margin  norms,  moratorium,  etc.  These  directions  have  been  so designed that the moment calamity is declared by the concerned District Authorities they are  automatically set  in  motion  without  any  intervention,  thus  saving precious  time.  The benchmark for initiating relief measures by banks has also been reduced to 33% crop loss in line with the National Disaster Management Framework.

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