ECI stalls Karnataka farm loan waiver scheme till the end of election process

Decision to stop the scheme for now was based on opinion that unlike other schemes announced in the budget, this scheme entails cash transfer to beneficiaries, “which could sway them weeks before polling.”

Erode 07/01/2013
 FOR FESTIVAL: Harvest of the sugarcane variety meant for sale during
 Pongal is in progress in several parts of Erode district, Tamil Nadu.
 PHOTO:M.GOVARTHAN

The farm loan waiver scheme of the Janata Dal (Secular)-Congress coalition government has been stalled temporarily by the Election Commission of India after the model code of conduct for the Lok Sabha election came into force.

The Commission indicated to the government to stop the transfer of money towards the loan accounts of farmers recently, after the State government sought its opinion on the issue, sources in the Cooperative Department told

The Hindu .

The Commission had told the State government to postpone payments till the end of the election process, the sources said.

The scheme entails waiving crop loans up to ₹1 lakh in cooperative banks and ₹2 lakh in commercial banks.

The decision to stop the scheme temporarily was based on the opinion that unlike other schemes announced in the budget, before the poll code came into force, the loan waiver scheme entailed cash transfer to the beneficiary, “which could sway the beneficiaries weeks before the polling.”

The model code of conduct, which came into force on March 10, when the election schedule was announced, will be in place till May 27.

Dues delayed

Following the ECI directive, loans in the cooperative sector, worth about ₹1,500 crore, which were due for repayment in March and April will be delayed. While loans totalling ₹1,182 crore of 3.04 lakh farmers were due in March, ₹387 crore of 93,000 farmers are due in April.

The government had shortlisted 8.08 lakh accounts in the cooperative sector to receive the waiver benefits up to April, 2019, the sources said. The whole process was set to be completed by July, 2019.

In all, the government is expected to spend ₹9,448.68 crore to benefit 20.38 lakh farmers, of whom 16.76 lakh farmers, who have provided information such as ration card, Aaadhar number and RTC, have been identified as beneficiaries so far.

The total quantum of loan waiver in commercial banks is expected to be around ₹12,000 crore.

“The ECI directive could also mean the refinancing of loans in the cooperative sector by NABARD may also be delayed now. Even the district cooperative banks will be unable to repay the loans taken from NABARD,” the sources said