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Rs 4.7 trillion farm loans waived in 10 years

Various states have written off Rs 4.7 lakh crore worth of farm loans in the last 10 years, though this is still below the total amount of bad loans from industries, said a report by SBI Research.

“Even though the agriculture NPAs (non-performing assets) were only Rs 1.1 lakh crore or 12.4 per cent of the overall NPAs in FY19, if we accounted for Rs 3.14 lakh crore worth of farm loan waivers announced in the last decade, agri NPAs/burden for the exchequer/banks could be a staggering Rs 4.2 lakh crore, and if taken into account the latest Rs 45,000-51,000 crore write-offs announced by Maharashtra, this it could be at Rs 4.7 lakh crore, which is 82 per cent of the industry-level NPAs,” the SBI Research report claimed.

In FY19, farm loan NPAs jumped to 12.4 per cent or at 1.1 lakh crore of the Rs 8,79,000 crore of total bad loans in the system, up from Rs 48,800 crore or 8.6 per cent of the total NPAs of Rs 5,6,6,620 crore in FY16, the report observed.

It can be noted that since FY15, 10 of the largest states announced farm loan waivers worth Rs 3,00,240 crore to alleviate the indebtedness of farmers and the spate of suicides. If the numbers announced by the Centre under the Manmohan Singh regime in FY08 is counted, this goes up to around Rs 4 lakh crore; of this, over Rs 2 lakh crore have been made since 2017, the report said.

It also pointed out that most of these write-offs have been only in paper as actual write-offs have not been more than 60 per cent, while the lowest delivery has been 10 per cent in Madhya Pradesh.

Another interesting observed put forth by the report was that during the years when farm loans were written off, there had been massive fall in fresh farm loan intakes. For instance, in FY18, when Maharashtra, Karnataka and Punjab announced farm loan waivers, the annual growth in fresh loan disbursements were a whopping -40 per cent in Maharashtra, a paltry 1 per cent in Karnataka and 3 per cent in Punjab, the report noted.