Maharashtra govt modifies loan waiver scheme, removes Rs 2 lakh arrears ceiling

Mumbai, Jul 10 (PTI) Announcing a significant change in the latest farm loan waiver scheme of his government, Maharashtra Chief Minister Devendra Fadnavis on Friday said the condition that the dues should not exceed Rs 2 lakh has been removed. This will benefit thousands of farmers who were excluded due to the ceiling, he told the legislative assembly. Replying to a debate on the opposition-sponsored 'last week motion', he also said that earlier the scheme was applicable for arrears till 2025-26, but now it will be extended for dues till 2026-27. The 'Punyashlok Ahilyadevi Holkar Farm Loan Waiver Scheme' will benefit about 56 lakh farmers, the chief minister said. Defending the scheme, Fadnavis, who also holds the finance portfolio, said it was needed for helping distressed farmers regain access to institutional credit. No farmer has ever become rich because of a loan waiver, but such measures were necessary to ensure farmers do not get entrapped by private moneylenders, he said. The BJP-led government could have postponed the decision to waive farm loans as there are no elections until 2029, but it chose to announce the scheme because farmers were facing financial distress, the chief minister said. The state already provides an annual electricity subsidy of around Rs 25,000 crore to farmers, while the agriculture department's various subsidy schemes together have an outlay of about Rs 95,000 crore, he noted. Rejecting criticism that only Rs 12,000-13,000 crore would be disbursed and 36 lakh farmers would be left out, Fadnavis said the "historic" scheme would benefit 56 lakh farmers with assistance worth Rs 36,000 crore. The previous Mahatma Jyotirao Phule farm loan waiver scheme of 2019 capped eligibility at overdue loans of Rs 2 lakh, and a farmer was excluded from the scheme if the dues exceeded this cap by even Rs 1, Fadnavis said. Around 32 lakh farmers benefited under the Mahatma Phule scheme, and Maharashtra is the only state to have implemented major farm loan waivers in 2017, 2020 and 2026, he noted. The chief minister conceded that regular waivers could encourage borrowers to delay repayments and weaken cooperative banks' financial health. The government examined the suggestion that beneficiaries of loan waiver should be excluded from future schemes, but decided to strike a balance between helping farmers and protecting the banking system, he said. Beneficiaries of the 2017 loan waiver were excluded from the 2019 Mahatma Phule scheme, and similarly, farmers covered under the 2008 national farm loan waiver had been excluded from Maharashtra's 2009 scheme. Therefore, such exclusion was not unprecedented, he said. Responding to demands from ruling alliance MLAs to remove the Rs 50,000 repayment-related condition, Fadnavis said doing so would impose an additional burden of Rs 4,000-5,000 crore on the exchequer. However, he announced that farmers covered under the Mahatma Phule loan waiver scheme would also now receive waiver benefits up to Rs 2 lakh. The cut-off for overdue loans has been extended from the 2025-26 financial year to include loans outstanding up to the 2026-27 financial year, he said, describing it as the first such decision taken by any government in the state. Representatives of the banking sector were consulted before finalising the scheme, Fadnavis said, adding that the state proposes to spend Rs 20,000 crore in the first year, Rs 22,000 crore in the second year and Rs 25,000 crore thereafter as part of its overall support to the farm sector. PTI MR KRK