Karnataka Budget: Kumaraswamy announces Rs 34,000-cr farm loan waiver; non-defaulting farmers to get Rs 25,000 each

Amid the pressure to stay true to JD(S)’ poll promise, Karnataka chief minister HD Kumaraswamy on Thursday — in his maiden budget — announced farm loan waiver of Rs 34,000 crore, while setting Rs two lakh as the upper limit for each farmer. “The coalition government has the major responsibility of waiving farm loans and we have begun gathering the required funds for it. We have begun cutting down on unnecessary spending,” The News Minute quoted him as saying. The chief minister, who also holds the finance portfolio, said that to allow farmers to avail new loans, the government will take action to issue clearance certificate by waiving the arrears from the defaulting account. “For this purpose, Rs 6,500 crore is earmarked in 2018-19 budget,” he said. In the first phase of the crop loan waiver, all defaulted crop loans up to 31 December, 2017 will be waived. “As an encouragement to the non-defaulting farmers who paid their loan within time, I have decided to credit the repaid loan amount or Rs 25,000, whichever is less,” he was quoted as saying by ANI. [caption id=“attachment_4670411” align=“alignleft” width=“380”]  Chief Minister HD Kumaraswamy before presenting the Karnataka budget on Thursday. Twitter@CMofKarnataka[/caption] The chief minister said that the welfare schemes like Anna Bhagya (for free rice) and Ksheera Bhagya (meals for school students) — introduced by the Siddaramaiah government — will continue to stay in place and the current government will bring in more schemes. “Growth rate in 2016-17 was 7.5 percent and it increased to 8.5 percent in 2017-18. (Our) priority is to mobilize resources for farm loan waiver. (We are) committed to fulfill promises made in our manifestos,” ET Now quoted him as saying. In view of the burden that the waiver scheme would put on the exchequer, Kumaraswamy also announced proposals to mop up additional resources, including increase in the rate of tax on petrol by Rs 1.14 per litre and diesel by Rs 1.12 per litre. He also proposed a hike in the additional excise duty on Indian-made liquor by 4 per cent across the board on all 18 slabs. Kumaraswamy recalled his assurance to waive all types of crop loans of farmers taken for agricultural activities within 24 hours of formation of a full-fledged government. “However, even though the people of the state have not blessed a single party government, I have been provided with a good opportunity to form a coalition government and to work as chief minister of that coalition,” he said. The families of the government officials and officials of the cooperative sector, farmers who have paid income-tax for the past three years, and other ineligible farm loan recipients will be outside the purview of the loan waiver scheme. In the run-up to the recent Assembly polls, the Kumaraswamy’s JD(S) had promised to waive farm loans borrowed both from cooperative and nationalised banks within 24 hours of coming to power. [caption id=“attachment_4675441” align=“alignnone” width=“850”] Toon by Manjul.[/caption] However, after the coalition government was formed, Kumaraswamy cited coalition compulsions and the need for studying the financial condition of the state as the reason for the delay in the announcement of loan waiver. Financial experts and some government officials have already expressed concern over the impact loan waiver may have on the state exchequer. On Sunday, the Congress-JD(S) coordination committee constituted to oversee the smooth functioning of the government approved the Common Minimum Programme, which includes waiver of farm loans, creation of one crore jobs and allocation of Rs 1.25 lakh crore for irrigation over the next five years. The budget also comes amid coalition worries and debate over whether there was a need for a full-fledged fresh budget as the government would continue almost all the flagship schemes of the previous government. Former chief minister and coordination committee chief Siddaramaiah, who held the finance portfolio in the previous government, had recently said there was no need for a fresh budget and insisted that a supplementary budget would do. Adding to the coalition’s discomfort is the controversy over videos that purportedly showed coordination committee chairman Siddaramaiah’s remarks, questioning the need for a fresh budget and expressing scepticism over longevity of the government. On the other hand, the opposition BJP has demanded that Kumaraswamy come out with a “white paper” on the state’s financial position before presenting the budget. Leader of the opposition in the Assembly BS Yeddyurappa has warned that if the government fails to keep up its promises on loan waiver, BJP and all its 104 MLAs would go to the people with the Congress and JD(S) manifestos to inform them that the parties have not ‘walked the talk.’ Congress president Rahul Gandhi on Wednesday expressed confidence about the coalition government acting on its commitment to waive farmer loans and to make farming more profitable.

With inputs from PTI