Crop loan waiver: SPV soon, modalities being formulated

The crop loan waiver is a key component of the Congress government’s six guarantees. The State government faces a burden of approximately Rs 32,000 crore to waive all pending crop loans till the last Rabi season.

Hyderabad: The State government is working on modalities to implement the crop loan waiver scheme by August 15. With limited options left, the State government is actively considering floating a special purpose vehicle (SPV) in the form of a statutory corporation to raise around Rs 32,000 crore through off-budget borrowings to execute the scheme in one go.

The crop loan waiver is a key component of the Congress government’s six guarantees. The State government faces a burden of approximately Rs 32,000 crore to waive all pending crop loans till the last Rabi season.

The scheme aims to benefit around 1.75 lakh farmers, primarily small and marginal, who secured loans from banks between April 1, 2019, and December 10, 2023, up to a maximum of Rs 2 lakh.

Sources said the State government was examining the Centre’s PM-KISAN scheme to formulate the guidelines for the crop loan waiver scheme.

PM-KISAN excludes certain categories including elected representatives, government employees and income tax payers among others from the beneficiaries. Other eligibility criteria, including the land extent owned, would also be considered while selecting the beneficiaries.

Officials did not rule out the number of beneficiaries being restricted to those who submitted applications under the Praja Palana initiative of the State government.

They suggested that the government might also seek fresh applications from eligible farmers. While initial estimations for implementing the scheme were pegged at Rs 32,000 crore, the officials are learnt to have been asked to tighten the qualification to reduce the expenditure.

The officials are said to have proposed to float the Telangana State Farmers’ Welfare/Development Corporation to raise funds for the loan waiver. This proposal, besides eligibility criteria, is expected to be discussed and approved at an upcoming State Cabinet meeting, which is likely to be held next week.

“The Chief Minister is keen to implement the scheme from next month and complete it by August 15. We are simultaneously pursuing the issue with the Reserve Bank of India for necessary approvals and also negotiating with various banks for the government to obtain loans,” a senior official in the Agriculture department told Telangana Today.

The proposed corporation, which would receive statutory status through State legislation, aims to raise long-term loans from banks, financial institutions, non-banking financial companies, investors, contributors, and capital markets. The Telangana government would guarantee these loans.

Besides leveraging government properties and assets, vacant lands could be transferred to the new corporation.

These lands could be sold as needed to repay the loans to banks and financial institutions. Additionally, revenues from agriculture market cess and portions of State revenues including excise as well as stamps and registration departments could be transferred to the corporation to cover interest and principal payments to lending institutions.