Reserve
Bank Governor Raghuram Rajan today said there have been no major crop
damages in areas of Andhra Pradesh and Telangana hit by the cyclone
last year to merit debt waiver and came out strongly against the
"moral hazards" which get played out due to such promises.
He said pre-election promises were made in these states for a
largesse in the form of a farm loan waiver and also explained the way
such an exercise gets carried out. Generally, a district collector
declares crops in his area as being affected due to a catastrophe,
which automatically triggers favourable treatment of bank loans,
under which the affected dud loans are not treated as bad loans,
Rajan said. However, in case of Andhra and Telangana, which were hit
by cyclone Phailin last year, it was discovered that there were no
widespread damages to the crop that merit debt waiver, he added.
"Because of a variety of factors, there was no emergency
declared (by any district collector), no request for a restructuring
was made and we had the full harvest coming in," Rajan said. "We
have been quite categorical about the dangers of talking about
waivers, about putting the idea of waivers because it creates the
possibility that anticipating such waivers, both the beneficiaries as
well as others who think there is a chance of benefitting stop paying
for fear that they will not benefit when the time comes," he
added. During the recent Assembly and general elections in Andhra and
the newly created Telangana, state leaders Chandrababu Naidu and K
Chandrashekhar Rao had promised farm loan waivers. While the quantum
of affected farm loan in Andhra is around Rs 87,000 crore, it is over
Rs 40,000 crore in the new state.
On
the massive non-payment problems in Andhra Pradesh and Telangana,
Rajan said even if some package gets announced, it will make sure
that the non-payers do not benefit. RBI has shown reluctance to a
debt waiver or restructuring of the loans as it sees no reason in
undertaking such a task. "We are in discussion with these state
governments to see where exactly is the distress so that we can take
a more reasoned and focused view. It doesn't appear from the
production data that the cyclone had widespread damage," he
concluded. The AP government had last month announced that it would
waive farm loans of up to Rs 1.5 lakh per family, a move that is
likely to impose a financial burden of Rs 35,000 crore on the
cash-starved state exchequer. In addition, the government also
decided to write-off loans amounting to Rs 7,600 crore given to women
self-help groups (SHG). Another Rs 300 crore loans given to weavers,
Scheduled Castes and other small artisans, too, would be waived, AP
Chief Minister Chandrababu Naidu had said.
No comments:
Post a Comment