Ahead of the elections to the State Assembly, Telangana Chief Minister K Chandrashekar Rao has announced that the State Government would resume the farm loan waiver disbursals beginning August 3.

Though the government started clearing small loans after it retained power in 2018, it stalled the process without indicating when it would resume the disbursals. 

 The State Government’s complete silence over the last few years over the continuation of the scheme angered the farmers’ unions. The Opposition parties, too, have put pressure on the Government, criticising it for not allocating funds in the Budget to waive off the loans.

At a meeting on Wednesday, the Chief Minister directed Finance Secretary K Ramakrishna Rao and other officials to resume the disbursals in phases beginning August 3 and complete the process by September 15.

He attributed the delay to the economic slump caused by the demonetisation, the financial crisis caused by the Covid-19 pandemic, and the restrictions on borrowings due to stringent FRBM norms.

“Now that the State was able to find its again economically after the financial crises, we have decided to resume the disbursals,” he said.

Poll promise

The ruling TRS party made a poll promise in 2018 that it would waive off all the farm loans (under Rs one lakh) accumulated from April 1, 2014, to December 11, 2018. The total outstanding amount eligible amount was pegged at ₹21,557 crore.

After assuming power, it cleared loans under ₹25,000 (about ₹1,198 crore to 5.83 lakh farmers).

“About 60 lakh farmers were awaiting the waiver. With outstanding loan amounts showing in their accounts, they are not getting new loans, forcing them to depend on private lenders at very high-interest rates,” T Sagar, State Secretary of Telangana Rythu Sangham, said.

The association recently wrote an open letter to the Chief Minister, explaining how the outstanding borrowings were impacting the credit profile of farmers.

Telangana Pradesh Congress Committee (TPCC) President, A Revanth Reddy recently called for a movement to bring pressure against the government to implement the scheme. He alleged that the State Government had decided to shelve the loan waiver scheme.