Mumbai: The Union government is planning the largest farm-loan relief package in the country’s history—totalling at least Rs 32,000 crore—and proposals to this effect will be unveiled when the Union Budget is presented on 29 February.
The package, which could end up totalling as much as Rs 90,000 crore depending on the final shape of the proposals, is at the core of efforts by the ruling United Progressive Alliance and its largest constituent, the Congress party, to revive Indian agriculture—and hopefully ride back to power in elections due in about a year.
People familiar with the process of creating the package say it will have several components—from a waiver of interest on some loans to the complete writing off of not just stressed assets (or bad loans) but even those loans that have been rescheduled.
As on 30 March 2007, the exposure of commercial banks to the agriculture sector was Rs 2.3 trillion. The total value of agricultural loans could be to the tune of Rs 3.62 trillion, including loans of cooperative banks and regional rural banks (RRBs).