Hyderabad: The Andhra Pradesh government today announced it would waive farm loans of up to Rs 1.5 lakh per family, a move that is likely to impose a financial burden of Rs 35,000 crore on the cash-starved state exchequer.
"This is a daring decision taken by our government for the welfare of distressed farmers in the state. We are financially in dire straits but we will honour our commitment by any means," Chief Minister N Chandrababu Naidu said at the end of a Cabinet meeting in Hyderabad this evening.
In addition, the government has decided to write-off loans amounting to Rs 7,600 crore given to women self-help groups Another Rs 300 crore in loans given to weavers, Scheduled Castes and other small artisans too would be waived, he said.
Cut-off date for the loan waiver would be March 31, 2014.
An expert committee headed by Nabard ex-Chairman P Kotaiah submitted its report to Mr Naidu today, suggesting a limit of Rs 1 lakh per family, but the Cabinet decided to enhance the cap to Rs 1.5 lakh. This (hike in cap) is likely to increase the financial burden by Rs 8,000 crore on the state.
"This will include crop loans taken on gold as well. The SHG loans are exclusive," the Chief Minister clarified.
The Telugu Desam Party-led government would intensify its economic activity to mop up resources to fulfill the commitment which was made ahead of the Assembly polls, he said.
"We will constitute a committee to suggest ways for mobilisation of funds. We plan to create a farmers' welfare cess in revenue-generating departments to pool up resources. We will also mobilise income from mining activity and create an escrow account for securitisation of funds," the Chief Minister said.
The government would also dispose red sanders, which has huge demand in global market, and generate additional funds.
The Government has told the Reserve Bank of India that it would repay the amount (to banks) in 6-7 years upon implementing the loan waiver but the central bank has not responded yet, Mr Naidu said. The RBI was yet to reply to the state's plea on rescheduling farm loans related to the last agriculture season, the Chief Minister added.