The Congress-JD(S) government in Karnataka has made good its poll promise, announcing waiver of loans up to ₹2 lakh.

About 45 lakh farmers in Karnataka will benefit from the loan waiver, Chief Minister HD Kumaraswamy announced on Thursday during his maiden Budget presentation. It will cost the State exchequer ₹34,000 crore.

Incentive for repayment

The Chief Minister, who also holds the finance portfoilo, said that as an incentive to farmers who have repaid the loan on time, an amount of ₹25,000 will be credited in their bank accounts. He said the government would implement the loan waiver scheme in a phased manner.

Family members of government officials and cooperative sector officials, and farmers who have paid income tax in the past three years and other ineligible farm loan recipients have been kept out of the loan waiver scheme.

The Karnataka government plans to provide loan waiver up to ₹2 lakh per family of individual farmers on overdue crop loans, restructured crop loans and crop loans classified as non-performing assets as per RBI norms, received on or after April 1, 2009, and outstanding in the books of the leading institutions as on December 31, 2017.

Kumaraswamy said a complete examination of the farmer’s crop loan waiver revealed that there were instances of loans exceeding ₹40 lakh of large landholding farmers. “In this background, as per the opinion of the farming community that it is not right to waive high-value crop loans, I have decided to limit the loan amount to ₹2 lakh. Due to this crop loan waiver scheme, farmers will get the benefit of ₹34,000 crore,” he added.

Loan beneficiaries

The total number of loan accounts of farmers who have crop loans with PSU banks, private sector banks, regional rural banks and cooperative sector is estimated at 44.89 lakh with an outstanding of ₹55,328 crore.

As per Thursday’s announcement, a total of 44.89 lakh farmers will benefit from the scheme, of which, 17.32 lakh farmers owing ₹30,266 crore are under overdue category. And 27.67 lakh farmers repaid ₹6,893 crore on time, but have running loans (regular loans). They will be given the incentive compensation of ₹25,000 each, amounting to ₹6,893 crore.

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