Karnataka loan waiver: Banks have still not begun process of clearing loans announced by Kumaraswamy

Three weeks since Kumaraswamy government in Karnataka announced a partial crop loan waiver for farmers, the process for the same is yet to begin. As per reports, the government is even yet to reimburse banks for the waiver which was announced by previous Siddaramaiah government.

According to reports, the government has not even issued guidelines to banks or entered into any understanding on how to go about the loan waiver. The New Indian Express report says that the government has only released Rs. 1,500 crore to cooperative banks, which is just part of the loan waiver announced by Siddaramaiah government. Yet another instalment needs to be released before the loan waiver announced by Kumaraswamy could start. Meanwhile, farmers’ unions have given a deadline of 15th August to take concrete measures, failing which a state-wide bandh will be held.

Meanwhile, the banks are reluctant to write off interest on the outstanding loans of Rs. 30,000 crore which amounts to about Rs. 5,300 crore. A meeting is expected to be held today with the SLBC (State-Level Banker Committee) where various issues are expected to be discussed. If the banks do not agree to the extent the loan waiver, the government will have to shell out Rs. 5,300 more which would take loan waiver amount to Rs. 50,000.

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Earlier, delay in detailing the loan waiver made farmers anxious as they were not sure whether to wait for loan waiver as promised by Kumaraswamy or to commence sowing by obtaining fresh loans from private lenders. Farmer loan waiver has been at the centre of many controversies during and after the Karnataka state assembly elections held in May this year.

The promise to waive off farmer loans has been repeated by Congress President Rahul Gandhi umpteen times while campaigning in Karnataka before the state went for polls. On 20th March 2018, during his third visit to Karnataka, he had assailed PM Modi and FM Jaitley for not forming a policy for farmer loan waiver. On 4th May 2018, Rahul Gandhi had said, “When the current NDA government is waiving loans of big business magnates, it will not be difficult to waive loans of poor farmers who are the ‘annadatas’”.

Congress’ newly minted allies and the current Chief Minister of Karnataka had also promised farm loan waiver in their Karnataka manifesto. Kumaraswamy, after being sworn in as the Chief Minister had also reiterated his commitment to waiving off farm loans. However, Kumaraswamy had said that since he has come to power with blessings of Congress, he can only take decision on loan waiver only after discussion and approval with Rahul Gandhi.

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