CA. M. Lakshmanan
The newly elected State Government in Tamilnadu has started the process of waiver of Agricultural Loans in order to fulfill its election promise. Many states may follow. But care should be taken while drafting the conditions for waiver so that non-agri. loans are not waived. Almost all Banks are lending money as agri. gold loans up to Rs. 2 Lakhs without asking for any proof of agri. land holdings and these loans are obtained by non-agriculturists also to a great extent. In the real sense such loans should not be waived and that is not the intention of the government i.e. loans given to non-agriculturists are not given for agricultural purposes. It is a pity that already such loans enjoy interest subsidy @ 2% granted by Central Government. Hence while waiving loans proper proof is to be obtained from the borrowers for pocession of agri. lands and for agri. operations carried by the borrower himself. Few years back while agri. loans were waived the benefit went to many non-agriculturists also, which is not the intention of the government. If such non-agri. loans are waived without looking into the purpose for which loans were obtained it is waste of public money belonging to common man.
As a precaution in future all Banks should be instructed by the RBI that agri. loans should not be granted to non-agriculturists and proper care should be taken at the time of granting loans viz. crop loan, gold loan, term loan etc., to obtain proof not only for agricultural holdings but also for carrying out the agricultural operations by the borrower himself.
Finally those who have paid the loans in time are at a loss because they will not get any refund and further due to such periodic waivers, in general the tendency of borrowers will be that they may not be repaying the loans and will be waiting for waivers. In future instead of waiving the so called agri. loans the authorities can think of giving compensations directly to the agriculturists in the form of cash subsidy based on the agricultural operations carried out and losses incurred.