Karnataka government announces partial farm loan waiver of Rs 34,000 crore

NEW DELHI: The Karnataka government today announced a partial farm loan waiver of Rs 34,000 crore which will benefit those farmers whose borrowings are less than Rs 2 lakhs.

Further, chief minister HD Kumaraswamy said the waiver would apply to those farmers who have defaulted in loan paybacks up until December 31, 2017. However, families of government officials and officials of the co-operative sector, farmers who have paid income tax for the past three years and other ineligible farm loan recipients are outside the purview of the loan waiver, announced the CM. And, to reward those who didn't default, the CM has "decided to credit the repaid loan amount or Rs 25000 (or) whichever is less".



These announcements were made in today's first budget presentation by the JD(S)-Congress coalition government. The CM also announced new measures to make new loans available to farmers.

"To facilitate the farmers to avail new loans, action will be taken by the government to issue clearance certificate by waiving the arrears form the defaulting account. For this purpose, Rs 6,500 crore is earmarked in 2018-19 budget," said Kumaraswamy.

These announcements were much anticipated. In the run-up to the recent assembly polls, the Kumaraswamy-led JD(S) had promised to waive farm loans borrowed both from cooperative and nationalised banks within 24 hours of coming to power.

The CM, who also holds the finance portfolio, had earlier cited coalition compulsions and the need for studying the financial condition of the state as the reason for the delay in the announcement of loan waiver. Financial experts and some government officials have already expressed concern over the impact loan waiver may have on the state's finances.

Another major budget announcement today an increase in the rate of tax on petrol to 32% from 30% and on diesel to 21% from 19%. That means, petrol price will be increased by Rs.1.14/liter and diesel by Rs 1.12/liter.

In other budget announcements, the CM said 35 electrical sub centres will be established through Karnataka transmission corporation to enhance transmission system. As many as 75 sub centres will be upgraded. A chemical effluent treatment plant will be built in the Peenya industrial area for which RS 10 crore has been allocated. IN addition, 42 continuous ambient air quality monitoring stations are set to come up with Rs 96 crore investment for them under the district mineral fund.

Also announced was a special package of Rs 150 crore for repairs of government primary, high school and pre-university colleges' buildings.