Govt could halve waiver by weeding out ‘urban farmers’

Nagpur: The state government, which had announced that it would pay off farmers’ dues to private moneylenders, is expected to cut its liability to a little over half of the first estimate.
As part of the Rs7,000 crore drought relief package for Vidarbha and Marathwada regions, chief minister Devendra Fadnavis had announced that farmers’ dues towards registered private lenders would be borne by government.The estimate originally stood at Rs373 crore, but when data was collected from moneylenders, the amount came to Rs680 crore.
Curiously, a major share of this was from urban areas rather than villages. This had left the department of cooperatives, which also governs private moneylenders, confused. It also delayed a final government order on the waiver plan.
After many rounds of meetings, it is learnt that the government may now exclude the amount lent by moneylenders in cities. It is being considered that if the loans were given in cities, they must not be to farmers. The department earmarks geographical areas while granting money lending licences. The department is of the view that granting loans to persons from outside the limits can amount to violation of the rules.
If loans from urban lenders are discounted, the total liability may be in the range of Rs250 to 270 crore. This is even lesser than the original estimate of Rs373 crore.
The waiver plan covers districts in Vidarbha and Maharashtra. The highest share of the waiver would go to Nagpur division of Vidarbha that has Wardha Bhandara, Gondia, Chandrapur and Gadchiroli districts under it.
Over Rs200 crore of loans in this division are from urban areas. If only advances from rural parts are considered, the figure comes to Rs100 crore, with almost an equal amount from Amravati division. The latter covers Yavatmal, Akola, Buldhana and Washim districts. The share from Marathwada is not much so it is expected that the total liability may be much less than Rs373 crore estimated earlier, say sources.
The exercise for collecting data on loans given by moneylenders revealed that the amount borrowed by each person was not much. Though the average comes to Rs10,000, there have been loans as small as Rs3,000.
Generally, the tenure is not more than three months. The loans are against gold, and only 70% of the yellow metal’s worth is given as principal, with a year’s interest retained as security.
Sources say the figures show that moneylenders are not approached to raise funds for agricultural operations, with even some small traders taking such loans. Given the smaller loan size, it seems these are more of consumption loans. It was also seen that a large number of loans were provided around festival times.
Most jewellers double up as moneylenders, so the borrowers are also their customers. In a majority of cases, it was seen that the payments were prompt. But the same gold was repeatedly used to raise fresh loans. Sources in the department say there is little chance of the gold being seized on non-payment.