Cabinet sanctions fund for farmer's debt relief

The Central government has decided to release the first installment of fund very soon for waiving off the 4-crore of farmers' debt as Union cabinet on Thursday showed green signal to release of the initial corpus of Rs.10,000 crore for farmer debt relief fund in this fiscal under its scheme of ‘loan waiving’ for farmers.

The remaining sum of Rs.50,314 crore will be issued in the next four years to compensate the banks and other financial institutes that had disbursed the loan to 3-crores of small and marginal farmers and 1crore others farmer.

The first allocation of fund would pave the way of implementing the farm loan write off scheme that is schedule to decided by June 30 this year. Union Finance Minister P Chidambaram in the existing budget had proposed to allocate the sum of Rs.60,314-crore for relieving the 4-crores of farmers who had taken the loan from scheduled commercial banks, regional rural banks and cooperative credit institutions till March 31, 2007 or could not repay it by December 31, 2007 would come under this scheme.

The rest of the allocation will be released in sum of Rs 15,000 crore each in 2008-09 and 2009-10, Rs 12,000 crore in 2010-11 and Rs 8,314 crore in 2011-12.

“Upon being granted the debt waiver or signing an agreement for debt relief under the one-time settlement, the farmer will be entitled to fresh agricultural loans from banks.” said an official spokesperson over the issue of one-time settlement scheme proposed for 1-crore other farmers.

Under the one-time settlement scheme, as much as one-crore farmer will get 25% of rebate of their heavy loans if they pay the 75% loan as lump-sum amount and after repaying it, they will be eligible for taking fresh loans from the regional, rural and commercial banks and financial institutes.

While as per ‘waiving off farmer’s loan scheme’, a total of 03-crore of small and marginal farmers would get 100% subsidy from the banks and government would compensate those banks and financial institutes that have distributed the loans.

As, per scheme’s norm, ‘marginal farmers would be recognised those who have hold up to one hectare of land, while small farmers are considered those who have 1-2 hectare under their ownership.