Daily World Special farm loan waiver: Captain wants complete waiver amid issues of moral hazard, constraints

DW Bureau / Chandigarh

The Congress governmentÔÇÖs flagship declaration to waive off all agricultural loans has run into problems ranging from moral hazard to financial constraints even as Chief Minister Capt Amarinder Singh has made it clear to his officers that his government will carry out complete debt waiver regardless of any constraint.

ÔÇ£While the Committee on loan waiver headed by Dr T Haque is exploring all possibilities and will again meet on May 19 in Delhi to deliberate on the issue, the Chief Minister is clear that the entire loan will be waived off in one go,ÔÇØ a top government officer told Daily World on Monday.

In a meeting chaired by Capt Amarinder on Saturday regarding doing away with the coercive recovery process of such loans, the top officers of the Departments of Agriculture, Finance and Cooperation presented their perspectives on the problem, and informed that around Rs 18,000 crores is outstanding on account of loans of cooperative institutions, while the cumulative figure for banks, including the nationalised banks is nearly double the loans taken by farmers from cooperative institutions. No accurate estimates are yet available for non-institutional loans for the informal sectors, such as the ahrtiyas.

In light of this, the officers suggested that perhaps as a first measure, the State Government should consider waiving off loans up to Rs 1 lakh for farmers having holding up to 2.5 acres. This figure is estimated to be around Rs 3,000 crore. The Government is unable to provide this cash compensation to the banks and cooperative institutions because due to its other commitments, the borrowing limits are already overstretched.

ÔÇ£Without this cash compensation, the Cooperative institutions will die a certain death because these will have no working capital to advance for the next season. The rate of recovery in the current fiscal is already abysmally low as the farmers have virtually stopped their repayments in anticipation of the waiver,ÔÇØ a senior officer who attended the meeting told Daily World. Notwithstanding their suggestions, the Chief Minister categorically said that he would like this poll promise to be implemented in one go.

The meeting was also attended by Chief Secretary Karan A Singh, Special Chief Secretary (Revenue) K B S Sidhu, Additional Chief Secretary (Development) Satish Chandra, Principal Secretary (Finance) Anirudh Tiwari, Principal Secretary (Cooperation) V K Singh, Principal Secretary to CM Tejvir Singh, Special Principal Secretary to CM Gurkirat Kirpal Singh, Registrar (Cooperative Societies Rajat Agrawal, Markfed Managing Director A S Thind, Director (Agriculture) Dr B S Sidhu and Chief Executives of Cooperative institutions.

Sources said the nationalised banks are also unlikely to offer any state government mediated one-time settlement without a specific approval from the Government of India and the Reserve Bank of India. Another problem with implementing the waiver in a piecemeal manner would be that the outstanding loans would not be easily repaid by the farmers. The government, meanwhile, is desperately searching for a formula so that this categorical pre-poll commitment which has now been approved in principle by the Council of Ministers does not become a proverbial albatross round the neck of the government, they added.

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