Responding to pressures within government, the farm debt waiver and relief scheme has been enhanced to Rs 71,680 crore from the earlier Rs 60,314 crore, even as its coverage was widened to include 7 million more marginal and small farmers, taking the number of beneficiaries to 43 million from the originally proposed 40 million.
The revised outgo, however, may be scaled down to Rs 66,000 crore after an audit, Finance Minister P Chidambaram told reporters following a meeting of the Union Cabinet to discuss just this one item on its agenda.
"It has taken me two months to draft the scheme and with the Cabinet approving the guidelines today, the scheme has taken off. I am confident that by June 30, nearly 43 million people will have benefited from this scheme. It is the most ambitious programme ever undertaken by any government in India," he said.
The increase in the cash outgo is on account of the fact that farm loans disbursed under Kisan Credit Card have also been made eligible for the waiver. Farmer collectives that borrow as self-help groups and joint liability groups have also been brought under its ambit.
The government has also decided to treat 237 districts as being dry and unirrigated in their entirety, irrespective of the fact that only some blocks within them are desert or are drought-prone.
Farmers in these districts are entitled to a one-time settlement amounting to 25 per cent of the outstanding debt or Rs 20,000, whichever is higher. Sixty to 65 per cent of farmers here have debts below Rs 20,000, implying that most of them will enjoy full debt waiver.
In other districts, these farmers will get 25 per cent of their overdue amount written off.
Meanwhile, the number of "other" farmers (with land holdings above 2 hectares) has reduced from the initial estimate of 10 million to around 6 million in the guidelines that were released today.
Chidambaram made it clear that banks will not levy additional charges on any farmer. "They will not be charged any application
The move is aimed at providing "maximum relief" to those who have not been able to repay their debt to the Indian banking system from March 31, 1997, till end 2007.
Underscoring the United Progressive Alliance's (UPA) plan to leverage the scheme, a massive publicity campaign will be launched.
"I will travel to do spot verification of the scheme. All senior bank staff will fan out all over the country to ensure its implementation," Chidambaram added. The RBI is the nodal agency for banks. NABARD, the apex agricultural refinance bank, will be the agency for regional rural banks and cooperatives.
Chidambaram also said that the scheme would be implemented in an extremely easy manner for the farmer, who will not have to submit any documentation whatsoever, or pay any charges.
"Banks will prepare lists of the farmers and put them up prominently at branches. Farmers will only to have approach the bank concerned and get a waiver certificate. Once this is done, they will also immediately become eligible for fresh credit," he said. The government will provide Rs 40,000 crore to the lenders this year, with balance being paid over the next two years.
Banks will be reimbursed fully over three years, Chidambaram said. "Banks are in no way prejudiced. In fact, the debt is taken over effectively by the central government. Banks have by and large welcomed the scheme," he said.
Leading bankers said they were geared to implement the scheme. "We will deploy additional manpower to ensure that it is successful," said M D Mallya, CMD, Bank of Baroda.
"We have already asked our branches to be fully ready for the scheme. The idea is to provide liquidity and farmers will be able to avail of the line of credit for the kharif season," said M V Nair, CMD, Union Bank of India.
