Farmers needn’t repay ‘unauthorised’ moneylenders: Pawar

March 1st, 2008 - 11:10 pm ICT by admin  

A file-photo of P. Chidambaram

Mumbai, March 1 (IANS) A day after Finance Minister P. Chidambaram waived bank loans to small farmers in the annual budget, Agriculture Minister Sharad Pawar said here Saturday that farmers need not pay back loans taken from “unauthorised” moneylenders either. As farmers’ groups around India pointed out that most small farmers were indebted to moneylenders rather than banks, Pawar said the central government would ask the states to set up a special machinery or task force to curb the influence of unauthorised moneylenders in rural India.

“We decided to waive off crop loans. But our study shows that a major chunk of farmers in the country will continue to toil under a deep debt, as these loans have been taken from unauthorised moneylenders and money lending institutions,” Pawar told reporters.

The state governments will be asked to make all such pending debts wherein unauthorised money lending is involved “null and void” and the farmers “need not repay at all”, he said.

Asked why the farm relief stated in the budget was limited only to small and marginal farmers, the minister said a decision to tackle the debt scene of the medium and big land holding farmers would be taken in the coming week.

“We are not sure how to tackle this burden but we are planning to sort it out and go for a one-time settlement in this matter,” he said.

Elaborating on the developments preceding the announcement of the Rs.600 billion ($15 billion) loan waiver, Pawar said the committees set up to look into the agrarian crisis found that nearly 40 percent of small and marginal land holding farmers were either defaulters or had problems in land records.

“The result of this was that the numbers of small farmers were going down. We have found that a debt-trapped farmer was not entitled to a fresh loan and the entire production process as a result gets choked up,” he explained.

A meeting of top officials from the ministries of agriculture and finance, National Bank for Agriculture and Rural Development (Nabard) and Reserve Bank of India earlier this year had come to a consensus that debts in sectors like crop, agrarian investment, horticulture, live stock and fisheries should be waived off.

The agriculture ministry is also planning to ask banks to make farmers eligible for consumption loans, Pawar added.

He also said that the government was planning to deregulate the agriculture sector to allow the farmers to sell their produce in any part of the country. “The deregulation when it takes place will be the first step towards liberalisation in the agrarian sector.”

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