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The waiver of overdue agricultural loans of Rs 60,000 crore, estimated to benefit 40 million farmers, is said to be the boldest feature of this Budget, especially because no provision for such largesse is made. The waiver scheme is applicable to loans disbursed by commercial banks, regional rural banks and co-operative banks which are overdue.

These banks have to complete the waiver process by June 30, 2008. The banks would be provided “adequate liquidity” by the Government over a three-year period. The Finance Minister was careful in not using the word “compensation”, on two presumptions: The banks are unlikely to recover these loans in the normal course, and they will be required to provide for the loss in such a situation anyway.

P. V. Maiya e-mail

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Farm loan waivers: The figures don’t add up

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