The Hindu : Front Page : Cabinet approves debt relief fund creation

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Friday, Mar 28, 2008
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Cabinet approves debt relief fund creation

Special Correspondent

NEW DELHI: The Union Cabinet on Thursday approved the creation of a Farmers’ Debt Relief Fund with an initial corpus of Rs.10,000 crore. This is to set in motion the Rs.60,314-crore loan waiver scheme aimed at mitigating the hardships of three crore small and marginal farmers, and others numbering one crore.

For operationalising the loan waiver scheme as proposed in the budget, the Rs.10,000-crore initial corpus was earmarked by Finance Minister P. Chidambaram in the supplementary demands for grants for the current fiscal itself. The implementation of the debt waiver and debt relief scheme is to be completed by June 30.

Briefing newspersons, an official spokesperson said the debt relief fund would be augmented with Rs.50,314 crore in the next four years to compensate banks and other lending agencies for their losses arising from the waiver scheme.

The government would provide, apart from the earmarked corpus, a sum of Rs.15,000 crore each in 2008-09 and 2009-10, Rs.12,000 crore in 2010-11 and Rs.8,314 crore in 2011-12. “Upon being granted debt waiver or signing an agreement for debt relief under the one-time settlement scheme, the farmer will be entitled to fresh agricultural loans from the banks.” Under the proposed scheme, marginal farmers are defined as those holding up to one hectare of land, while small farmers are tillers with one-two hectares in their possession. As for the one-time settlement scheme for the other one crore farmers, a rebate of 25 per cent will be granted, provided they pay 75 per cent of their outstanding loan amount. The programme is to cover all farm loans disbursed by scheduled commercial banks, regional rural banks and cooperative credit institutions up to March 31, 2007 and which fell overdue as on December 31, 2007.

No change in criteria

As is clear from the official statement released after Cabinet approval, there is no indication of any change in the eligibility criteria for the small and marginal farmers covered under the programme.

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