After Uttar Pradesh and Punjab, Congress-led Karnataka govt waives farm loan up to Rs 8,165 crore

Following Uttar Pradesh and Punjab's example, the Karnataka Congress government today announced crop loan waiver of up to Rs 50,000 per farmer.

The loan waiver will cost the state exchequer Rs 8,165 crore, PTI reported. 

The move will help about 22,27,506 farmers who had taken loans of about Rs 10,736 crore from cooperative banks in the state.

"Farmers are in distress. They have been demanding loan waiver. We have to respond to farmers, even though it will have an impact on state's finances," Congress chief minister Siddaramaiah said.

He added that the Centre will now have to come to the rescue of farmers by waiving the loan obtained by them from nationalised and grameen banks.

Chief minister Siddaramaiah said the crop loan obtained by farmers from cooperative banks is just 20 per cent, the rest is from grameen, nationalised and others banks that come under the central government.

BJP's Yogi Adityanath-led Uttar Pradesh government was the first to waive off farmer loans worth Rs 30,729 crores in April. 

Punjab's Congress chief minister Captain Amarinder Singh had last week announced total waiver of entire crop loans up to Rs. 2 lakh for small and marginal farmers up to five acres, and a flat Rs. 2 lakh relief for all other marginal farmers, irrespective of their loan amount.

BJP's Maharashtra government is also planning to announce a loan waiver before October 31, which is expected to benefit about 1.07 crore farmers with less than five acres of land. 

Earlier in June, the Reserve Bank of India governor Urjit Patel had said that unless the budgets of the state governments allow the fiscal space to waive off loans, it would be a risky path to tread on.

“Past episodes in our country had shown that when there are significant fiscal slippages they do permeate to inflation sooner or later. So, it is a path that we need to tread very carefully and before it gets out of hand,” he said.