Farm loans and their 'waivers': India

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RBI to study UPA-1’s farm loan sop success of 2008

Times of India

New Delhi: The government has initiated a study to ascertain how effectively the farm loan waiver, announced by UPA-1 in 2008, was implemented and whether the ‘aam admi’ actually benefited from the Rs 70,000 crore scheme.

The Reserve Bank of India (RBI) has been asked to provide all related banking data to the government’s auditor, the Comptroller and Auditor General (CAG), which will scan the disbursements made by public sector banks across the country with sample field visits. The opposition parties had alleged that only large farmers and those with perennial credit default history had benefited from the waiver, while the marginal farmers were kept away from any credit facility. “We are examining how effectively the agricultural debt waiver scheme was implemented,” CAG Vinod Rai told reporters in Shimla.

“We do not audit banks as it is done by the RBI and chartered accountants. But we decided to do this audit. So, now, we will look into the books of the banks also,” he added.

The debt waiver scheme was announced in the Union budget 2008-09 and covered all agricultural loans disbursed by commercial banks, regional rural banks and cooperative credit institutions to farmers. According to finance ministry, at least 3.69 crore farmers benefited from the scheme till November 2009. The government has claimed that all eligible farmers were covered.

Andhra Pradesh topped the chart of 35 states and Union Territories (UTs) for having extended the maximum waiver of Rs 11,353 crore with about 77.55 lakh farmers benefiting from the scheme. Till December 2009, various public sector banks had written off Rs 65,318 crore across the country.

Among other states, UP was second in the list of largest disbursements, while Maharashtra came at the third position for having waived more than Rs 8,900 crore to 42 lakh farmers. For bringing more farmers under the credit facility, the government had increased farm credit from Rs 87,000 crore in 2003-04 to Rs 3.25 lakh crore in 2009-10 and also lowered the rate of interest on such loans.