According to reports, after some state governments waived off agriculture loans and some announced plans of the same, many farmers have stopped repaying their debts.
Till date, Telangana, Andhra Pradesh, Uttar Pradesh and Maharastra have already announced waivers. This has become an important agenda to win elections. The farmers that are in different states are hoping for the same benefit. This prompted to repaying loans even after they are financially better placed.
A CEO of an agricultural bank said “If I expect someone to write me a cheque of Rs. 1 lakh to take over my loan, I am going to stop repaying. This is what is happening in many states.” According to reports recovery of farm loans in Punjab, last month has adversely affected the farmers. They have been waiting for farm loan waiver that the Congress led State Government promised.
The banks urged the State Government to take an immediate decision as 30 percent of farmers accounts have turned irregular. They requested the government to clear the state of ‘uncertainty’ on repayment of loans.
P.S. Chauhan, Punjab State Level Bankers Committee (SLBC) Convener and Punjab National Bank General Manager (Punjab,) said that “The loan recovery of rabi season has dropped because farmers are waiting for the debt waiver scheme.”
Political Parties have time and again used farm loan waiver to win votes. But bankers have opined that this helped them earn narrow political ends but no solution to the recurring problems in the farming sector.
This is happening amidst the instances when public sector banks are struggling with huge bad loans. Banks’ farm loans stand at more than Rs. 10 lakh crores and waiving them off will incur huge losses to the banking sectors.
