Farm loan waiver may cost Karnataka Rs 12,000-cr, hit development works

Bengaluru, May 24: If chief minister H D Kumaraswamy goes ahead with the farm loan waiver plan, it may cost Karnataka dear and hit the development works, according to economists.

Prof. R S Deshpande, senior economist and honorary visiting professor at the Institute for Social and Economic Change (ISEC), Bengaluru, opines that the cost of the proposed loan waiver to the state exchequer would be roughly to the tune of Rs 12,000 crore.

“The figure on the actual impact could go up as we still need to get numbers from commercial banks on the outstanding loans to such farmers (could be about 8 lakh of them),” he says.

“The immediate impact would be that the amount would get reduced from the state's expenditure on development. This may not be the best thing at the moment,” he adds.

Prof Deshpande says that the Karnataka government has already accumulated huge debt and servicing this will alone take a huge share of the state’s revenue every year.

He calls it a result of the failure of the state’s agriculture policy that allowed loans to get accumulated and not taking adequate correctives during crop failures and farmers’ distress.

"That is one reason farmer suicides continue in the state and it is estimated that about 10 farmers commit suicide everyday in the state,” he laments.