If the UP government fulfils its farm loan waiver promise, banks are likely to take a hit of Rs 27,420 crore and the scheme will lead to some stress on the state’s fiscal arithmetic, warns a report.
The BJP had in its UP election manifesto promised to waive farmers’ loans if elected to power. The party and its allies won a whopping 325 seats in the 403-member House.
According to RBI data (2012), 31 per cent of the direct agriculture finance went to marginal and small farmers (landholdings upto 2.5 acre).
“Taking this as a proxy for UP as well, around Rs 27,419.70 crore will have to be waived off in case the farm loan waiver scheme is implemented for the small and marginal farmers, for all banks,” the report said.
As per the Socioeconomic and Caste Census of 2011, 40 per cent of rural UP households are engaged in cultivation. When it comes to landholdings, 92 per cent are marginal and small farmers in the state, according to the 2010-11 Agriculture Census.