Despite waiver, farm loans up in Punjab

Ruchika M Khanna

Tribune News Service

Chandigarh, September 8

As the institutional loans advanced to farmers soar to Rs 77,700 crore, higher than the total farm debt in 2018, the futility of the Punjab Government’s flagship Farm Loan Waiver Scheme has hit home hard.

Latest data available from the State Level Bankers’ Committee shows the total loans advanced to farmers in Punjab stand at Rs 77,753.12 crore, as on June 2021. When the loan waiver scheme was launched in 2018, the total loans advanced to farmers stood at Rs 74,878.46 crore. In the past over three years, since the scheme was announced and implemented, the loan advanced has increased by Rs 2,874.66 crore.

This shows the hike in total advances in the agriculture sector is in spite of the fact that the state government brought out the much-hyped Farm Loan Waiver Scheme in January 2018, and claims to have waived loans of 5.64 lakh farmers worth Rs 4,624 crore. In addition, the state government has just extended the scheme for farm labourers. The government claims it wants to settle loans worth Rs 592 crore, taken by farm labourers from cooperatives, and so far, Rs 181 crore relief has been given.

The reason why farm debt has continued to rise and surpassed the figure of the advances in agriculture made before the scheme was launched is that it excluded more people than it benefitted. Data available from the committee shows in 2018, there were 17.30 lakh farmers in Punjab who had taken loans from banks, but only 5.64 lakh were found eligible (had a loan amount of less than Rs 2 lakh and had less than 5 acres of land) for the waiver.

“The majority of farmers were found ineligible. Various studies have shown the exposure to institutional credit among farmers having less than 5 acres is very less, as compared to farmers having more than 5 acres. Thus, a small percentage of farmers’ loans were waived. But in the subsequent years, these farmers again took loans and look at how the loan amount has grown. The scheme is flawed in the sense that it did not provide for either a roadmap or means for farmers to get out of the cycle of debt,” says RS Ghuman, who is an eminent economist.

Rs74,878 cr Farm debt before scheme launch

Rs77,753.12 cr Farm debt in June 2021

Rs2,874.66 cr Increase in debt

Rs4,624 cr Amount of debt waived