Bank stocks down for second day on crop loan waiver concerns

"The UPA government waived off loans worth Rs 72,000 crore during its term, but the BJP government failed to give relief to farmers", the CM said. But when there is a poor monsoon or a drought situation, farmers may be unable to repay loans, prompting states or the Centre to offer relief -reduction or full waiver of loans.

Prior on June 19, Punjab Chief Minister Captain Amarinder Singh declared loan waiver of whole product advances up to Rs 2 lakh for little and peripheral farmers up to 5 acres of land, and a level Rs 2 lakh alleviation for all other farmers of their loan amount.

The Karnataka government on Wednesday chose to waive crop loans of up to Rs 50,000 availed by over 22 lakh farmers from cooperatives in the state.

Reacting to the announcement, BJP Chief Ministerial candidate B.S. Yeddyurappa, in a statement, said, "This move of the Chief Minister is a definite pointer to elections in December".

However, Finance Minister Arun Jaitley earlier in June had said the Centre would not fund for loan waivers for farmers, adding that the states must fund for this on their own expense.

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Post Maharashtra and UP loan waiver, the company saw marginal improvement in collection rates.

Chief Minister Siddaramaiah had been under constant attack from the opposition BJP, which has accused him of "dilly dallying" on loan waiver. Siddaramaiah, by urging Prime Minister Narendra Modi to tell big banks to waive farmer loans in Karnataka, has put the saffron party in a quandary. Many other states charge for electricity from farmers, whereas in Karnataka, the government pays on behalf of the farmers. And if Modi refuses, he and the BJP will be portrayed as "anti-poor" and "anti-farmer" by the Congress.

The ruling Congress has been under intense pressure to write off farm loans after the governments of Uttar Pradesh, Maharashtra and Punjab waived farm loans recently. "We do not see Karnataka loan waiver impacting our repayment trend", he further mentioned.

Opposition leader Jagadish Shettar said that Siddaramaiah should have included all the farmers who borrowed loans from co-operative societies and should not have fixed a cap of Rs 50,000.

The farmers have taken altogether Rs 52,000 crore in short-term crop loans in Karnataka.

(Copyright © 2015. All Rights Reserved.)
 
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