Memorandum to AP Chief Secretary on Loan Waiver

140622-Chief-Secretary-Telangana-final Download
Rytu Swarajya Vedhika has a submitted a memorandum with the following demands.

1. As a first measure, the Government must delink the loan waiver proposal from distribution of Kharif loans for the current agricultural season and should immediately take action to disburse crop loans  without delay to all the farmers including Tenant farmers.
2. While the farming community is in deep crisis due to indebtedness, loan waiver is not a solution to end the crisis. The crisis is still continuing even after the debt waiver and relief extended during 2008.   A comprehensive solution lies in bringing in policy changes related to all aspects of agriculture (Credit, input support, extension and marketing) as well as pursuing the land reforms agenda with renewed vigour to bring about a meaningful change in the agriculture sector to help close to 85% ofsmall and marginal farmersto secure and sustain their livelihoods. . A piecemeal, myopic solution to the problem in the form of loan waivers alone is a grossly inadequate solution to the larger, complex set of problems ailing the farming sector in the State.
3. Tenant farmers, dalits, tribal and women farmers who received lands under various land distributionschemes do not have access to institutional credit. They are taking loans from private money lenders, input dealers or Microfinance Institutions at a higher interest rate (as high as 60% Rs. 5 per Rs. 100 per month).  These farmers  are in deep crisis and constitute a large chunk of farmers committing suicides. This loan waiver is of no help  to them.
4. Government should make immediate effort to increase access to institutional credit to real cultivators.  One of the problems often expressed by the bankers in giving crop loans to these farmers is the lack of a guarantee for repayment. The state government should establish a Credit Guarantee Fund for small and marginal farmers which can give collateral security to the tenant farmers.
5. All the real cultivators who are not covered under institutional credit are to be organised into cooperatives and linked to the institutional credit.  All their high interest private loans can be swapped with low interest bank loans.
6. Loans of all farmers who have committed suicides since 1997 have to be waived and their private loans be swapped with no interest bank loans.
7. Government should introduce special budget for agriculture with an allocation of atleast 10% of the total budget.
8. Government must ensure that the loan waiver does not benefit non-cultivating, absentee land owners who have other major sources of income or livelihood and have taken loans in the name of agriculture. Specific mechanisms must be evolved to identify and eliminate the above categories of landowners from the purview of the loan waiver scheme. Further, steps must be taken to identify the actual cultivators and update the revenue records accordingly. Government must also actively explore mechanisms (e.g. setting up a separate Committee) for evolving a set of criteria to enable eligible farmers benefit from the loan waiver scheme in a meaningful manner.
9. Government should also take care that the loan waiver does not apply to ineligible loanees through the following measures
   1. Restricting the loan waiver only to crop loans
   2. In case government decides to waive short term and allied sector loans, it should be restricted to small and marginal farmers only (up to 4 ha in rainfed areas, 2 ha in irrigated areas)
   3. Exempting Hyderabad district from the purview of the loan waiver. A thorough enquiry should be conducted and if need be waiver can be extended in the second phase. Pending this, the crop loan waiver up to one lakh for all farmers in the other district should be done immediately.
10. Government should with stain from any effort to impose additional taxes or issue bonds and transfer the burden on to people or the next government.