Kumaraswamy cautious on farm loan waiver, Cong not keen

Bengaluru, May 23: Chief Minister-designate H D Kumaraswamy on Tuesday said waiving farm loans seemed a difficult proposition in a coalition setup, even as the Congress is not inclined to support writing off loans farmers have borrowed from nationalised banks.

Before polls, Kumaraswamy had announced 100% waiver of loans borrowed by farmers from cooperative financial institutions and nationalised banks, a move that is estimated to cost Rs 53,000 crore. The waiver will be done within 24 hours of him coming to power, he had said.

“It seems like people themselves don’t want the waiver, because they did not give JD(S) absolute majority. Now, in a coalition government, I can’t take decisions on my own. People will have to wait,” he told reporters in Sringeri, essentially raising a question mark on the farm loan waiver promise. However, he asked farmers “not to worry.”

Kumaraswamy’s plan of waiving farm loans from nationalised banks is not in line with the Congress’ stand. “Our stand is that the state government should not waive loans farmers have borrowed from nationalised banks. It is the duty of the Centre to share the burden,” a Congress leader said.

The Congress is also worried that a full loan waiver could upset the fiscal prudence the Siddaramaiah-led government achieved, on the back of which the party went to town claiming Karnataka was India’s most fiscally prudent state. “The burden of a farm loan waiver including nationalised banks will result in cuts in the areas of irrigation, highway development and so on,” the Congress leader pointed out.

When contacted, former agriculture minister Krishna Byre Gowda said: “The party will take a considered stand when the issues comes up for discussion.”

In July 2017, Siddaramaiah waived short-term loans that 22.27 lakh farmers borrowed from cooperative banks, costing the exchequer Rs 8,165 crore. To make up for the waiver, the government tapped into the investible surplus funds of the state-run Mysore Minerals Limited, a decision that drew criticism. 

“Loan waivers do give political gains, but it’s simply bad economics,” economist R S Deshpande said. “If at all the government has to give a loan waiver, the Bhagya schemes will have to be closed and unnecessary expenditure cut.”

Even B S Yeddyurappa, who was the chief minister for two days last week, stopped short of waiving farm loans up to Rs one lakh after he was told that it would cost the exchequer Rs 35,000 crore.

H D Kumaraswamy, Chief Minister-Designate: My promise on crop loan waiver stands. My statement was twisted by media in Dharmasthala. As it’s a coalition government, I am bound to discuss this subject with the Congress. There is no need for the farmer community to get apprehensive".