Lok Sabha Question No. 6 (STARRED), answered on 2017-12-15
Subject: Farm Loan Waivers
Ministry: FINANCE
Asked by: KIRTI (JHA) AZAD

†*6. SHRI KIRTI AZAD.

Will the Minister of FINANCE be pleased to state:

- (a) the names of the States which have announced farm loan waivers;
- (b) whether the Union Government has any such proposal, if so, the details thereof and if not, the reasons therefor;
- (c)  whether  the State Bank of India (SBI) has prepared any research report in the matter; and
- (d) if so, the details thereof along with the salient features of the report?

Answer The Minister of Finance (Shri ArunJaitley)

- (a)  to (d) : A Statement is laid on the Table of the House

## Department of Financial Services

## Government of India Ministry of Finance LOK SABHA

Starred Question No. †*6

To be answered on Friday, December 15, 2017/Agrahayana 24, 1939 (Saka)

## Farm Loan Waivers

## Statement refer to in reply to parts (a) to (d) of Lok Sabha Starred Question No. †*6 to be answered on 15.12.2017 regarding Farm Loan Waivers by SHRI KIRTI AZAD.

(a):  National  Bank  for  Agriculture  and  Rural  Development  (NABARD)  has  informed  that during  the  years  2016  and  2017  the  State  Governments  of  Tamil  Nadu,  Maharashtra, Karnataka,  Uttar  Pradesh,  Jammu  &  Kashmir  and  Punjab  have  announced  their  own schemes, inter-alia, of waiver of loan of farmers.

(b): There is no proposal under consideration of the Union Government to waive off loans of farmers. However, to reduce the debt burden of farmers, the following major initiatives have been taken:

 With a view to ensuring availability of agriculture credit at a reduced interest rate of 7% p.a.  to  farmers,  the  Government  of  India  in  the  Department  of  Agriculture,  Cooperation  & Farmers' Welfare (DAC&FW) implements an interest subvention scheme for short term crop loans up to Rs. 3.00 lakh. Under the said scheme, additional subvention of 3% is given to those farmers who repay their short term crop loan in time, thereby reducing the effective rate of interest to 4% p.a. for such farmers.

 Reserve  Bank  of  India  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.

 Pradhan Mantri Fasal Bima Yojana (PMFBY) provides a comprehensive insurance cover against failure of insured crops due to non-preventable natural risks, thus providing financial support to farmers suffering crop loss/ damage arising out of unforeseen events; stabilizing the income of farmers to ensure their continuance in farming; and encouraging them to adopt innovative and modern agricultural practices. For development of agriculture and welfare of farmers of the country, the Government in DAC&FW, is implementing various Central Sector/ Centrally Sponsored Schemes, which include:

- (i) Rashtriya Krishi Vikas Yojana (RKVY)
- (ii) National Food Security Mission (NFSM)
- (iii) National Agriculture Market (e-NAM)
- (iv) National Mission For Sustainable Agriculture (NMSA)

(c) & (d): State Bank of India (SBI) has informed that it has published a study report about loan waiver and its impact on State finances in SBI ECOWRAP issue No. 13, FY 18 dated 20.06.2017. The gist of the study is as under:

-  The  demand  for  a  loan  waiver  currently  has  been  accentuated  perhaps  by  2 successive years of less than normal rainfall in FY14 and FY15.
-  Apart from  impacting  asset  quality  for  the  Agricultural  sector,  farm  loan  waiver  will impact State finances adversely.
-  The current loan waiver, however, has a positive aspect unlike the earlier ones, as the  schemes  announced  in  several  States  have  specified  a  threshold  limit  (mostly Rs.1 lakh), and any amount over that will have to be paid.