As HD Kumaraswamy Plans Farm Loan Waiver For Karnataka, Some Difficulties

Bengaluru: Manifestos of political parties ahead of an election usually make big promises. One such promise from the Janata Dal Secular or JDS in Karnataka was the waiving of farmer loans if they came to power.

Now, the party is in power as part of a coalition government with the Congress. The loans have not yet been waived, although the chief minister has given one more assurance of doing so -- saying the details would be announced in the upcoming budget presentation.

One week after taking oath on May 23, Chief Minister HD Kumaraswamy and his deputy from the Congress, G Parameshwara, held a meeting with farmer leaders on the loan waiver issue.

He had asked the farmers to give him 15 days to look into the issue.

Now, more than 15 days have passed and the loan waiver is still pending. On Monday, Mr Kumaraswamy met officials from banks and cooperative societies to take their suggestions in order to take the matter forward.

He iterated his commitment to the loan waiver, telling reporters after the meeting: "Everybody is for the waiving or loans. Nobody is against this. They are saying waive even more loans. Put the cut-off date forward. I have noted the information they gave me and will take a decision on the loans."

He said it did not matter how long he has been in power, but that his focus was to help the distressed farmers of Karnataka while making sure that banks and cooperative societies did not suffer a loss.

One of the reasons given for the relative delay in announcing the waiver had been that decisions in a coalition government do take more time than if a party had come to power on its own.

But the previous Congress government in Karnataka had waived loans of around Rs 8,000 crore and the party says it is also in favour of the loan waivers.

So what is holding up the waiver?

First, the sheer amount of money involved. The figure mentioned by Mr Parameshwara in the context of farm loan waiver is a whopping Rs 53,000 crore. This is a sum that no state government can lightly set aside.

Mr Kumaraswamy will present the state budget on July 5 -- he has kept finance after a protracted tussle with the Congress over the portfolio that finally needed the intervention of Congress president Rahul Gandhi.

The chief minister said he would announce the details of the loan waiver in the budget. It is likely to be in two phases.

Another issue is who would qualify for these loans. As pointed out in the farmers meet, the benefits should not go to the wealthier farmers with larger land holding but only to those in genuine distress.

And also, only to those who have taken loans for farming requirements -- not for weddings or other expenses. Only farmers who have less than five acres will benefit for a waiver of a loan of Rs 1 lakh or less. The identification of these deserving recipients and checking their details is a time-consuming process.

It is also important that no middleman makes anything from such a waiver.

The greater desperation over unpaid loans is often over loans taken from private money lenders rather than nationalised banks. Private money lenders charge a crippling amount of interest -- but their attraction is that they hand over the money much faster and without the paperwork required by a government bank. Successive state governments have tried to crack down on these money lenders.