RBI letter gives partial relief only for crop loan waiver

Though the Reserve Bank of India (RBI) has conveyed its readiness to reschedule agriculture loans of farmers in Andhra Pradesh and Telangana, both the state governments are yet to probing way outs to come out from stalemate on how to kept their poll promise of farm loan waiver. Both the state governments seems to be not comfortable with conditions laid by RBI for loan reschedule.

Telangana cabinet yesterday has approved waiver of farm loans upto Rs 1 lakh benefitting over 39 lakh farmers. This would put a burden of Rs 19,000 crore on the exchequer.Chief minister K Chandrasekhar Rao said that this would be their commitment whatever may be RBI options.

Soon after receiving the RBI letter, finance minister of Andhra Pradesh Yanamala Ramakrishnudu convened a meeting of officials of finance department and asked them to prepare a list of the beneficiaries. It is understood that the government might wave off loans to the extent of Rs 1.5 lakh per family.

The major constrain both the state governments is that RBI agreed to repayment within three years, while the state governments are seeking for a period of seven years. In turn, now they are preparing to bargain for a period of five years.

Another major issue worrying state governments is RBI’s insistence that it would consider loan reschedule for drought declared mandals only, that too for khariff loans. This would make 86 mandals in Andhra Pradesh and 73 mandals in Telangana will be left out from this process. That needs state government to search for alternate financial sources for waive of loans. Both the governments promised to extend loan waive for gold loans also. But RBI is unlikely to cover such loans. As a result, RBI reschedule will provide only partial relief to state governments.

AP Chief Minister N Chandrababu Naidu has announced that there was no question of going back on implementation of loan waiver. It is said that the Kotaiah Committee constituted to work out the modalities of loan waiver scheme will submit its report by Saturday.