Debt waiver, relief schemes for marginal farmers

The banks may be on the tenterhooks but the ���Indian farmer��� is rejoicing. The Finance Minister has acted Santa Clause and announced debt waiver and relief for small and marginal farmers. The move will cost the government a total of Rs 60,000 crore ��� the waiver costing Rs 50,000 cr and a 25 per cent discount on the one time waiver to cost Rs 10,000 crore.

Agricultural loans given by scheduled commericial banks, regional rural banks and cooperative credit institutions up to March 31, 2007 and over-due as of December 31 that year will be covered under the waiver scheme to address the problem of indebtedness of farmers.

Agriculture loans restructured and rescheduled by banks from 2004-06 and other loans normally rescheduled under RBI guidelines will also be eligible under the waiver scheme.

The loan waiver scheme will benefit three crore small and medium farmers and cover loans worth Rs 50,000 crore in total ��� that is 4 per cent of the total loans of commercial banks.

One crore other farmers will benefit to the tune of Rs 10,000 crore in the waiver.

According to industry sources, the banks have reasons to be happy as there was an implicit hint that they would get reimbursed accordingly. In that scenario, the move will help the banks to get rid of bad debt.

The farmers can also take fresh loans post the settlement of the older ones which will give a fillip to agri credit space that has already touched Rs 2,40,000 cr in 07-08.