The Telangana government has issued orders waiving farm loans to the extent of R1 lakh each, which is estimated to cost the state exchequer R19,000 crore after calling a cabinet meeting.
According to an official release, the cabinet has also decided to "impress upon" the RBI to consider other districts also for loan reschedulement "in view of the wide spread damage to crops in the last five years". It had directed the state finance secretary to rush to Mumbai to discuss the matter with RBI. However, banks say the beneficiaries list is yet to be ascertained and work has begun on the same.
Last week, RBI had allowed banks to extend the loan restructuring facility to crop loan borrowers in about 100 mandals across three districts in Telangana. The new state has a total of 475 mandals and the government sought for the reschedulement of crop loans in about 415. The government had declared over 415 mandals in nine districts as cyclone-affected areas to seek reschedulement amounting to R7,000 crore. Incidentally, the Telangana government had approved waiver of all types of crop loans, including gold loans, upto R1 lakh, and has estimated the total arrears at R19,000 crore. The provision to seek reschedulement of loans from the RBI in the affected mandals amounts to R7,000 crore.
The government has decided to sell government-owned lands to raise the shortfall of R15,000 crore that it has to pay through waiver of farm loans. The RBI has agreed for a partial loan waiver only in three drought-affected districts in Telangana that amounts to R4,000 crore. The balance Rs 15,000 crore has to come up from the Telangana coffers.