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Loan Waivers – Another scam under UPA?

Under UPA in 2008, massive loan waivers were announced before the 2009 Lok Sabha elections. CAG had published a report  in 2013, which specified the discrepancies between the waivers announced and the amount actually reaching the beneficiary farmers.

A sizeable chunk of farmers in India accounts for small and marginal farmers in the country, the size of whose landholdings is less than 2 hectares. It is no secret that any income-generating activity requires credit, and farming is no exception.

With market forces at play and unpredictable weather conditions, farmers often can’t repay the loan. So, loan waivers announced for farmers by government, is a major policy decision, which apart from freeing them from the cycle of debt, gives them an opportunity to make a fresh start.

If we look at the CAG report, the huge loan waivers announced by the UPA before the 2009 elections had seemed like a political stunt. While some had been kept out of the waivers completely, some had received only a part of the pledged amount and not the whole amount. There were instances of tampering of records too.

Here we cite some observations from the CAG report of 2013 on the waivers.

Non-eligible beneficiaries were given loan waiver

CAG in its report had mentioned that non-eligible beneficiaries were granted loan waivers. According to the report, 8.5 percent of the total beneficiaries that is around 6,800 beneficiaries, were ineligible. This amounts to Rs. 20.5 crore being transferred to ineligible beneficiaries.

Eligible beneficiaries denied loan waiver

Around 1,250 eligible farmer beneficiaries were denied the benefit of loan waiver scheme. If translated to value terms, Rs.3.57 crore did not reach eligible beneficiaries. The table below as exactly cited in the CAG report mentions the total number of eligible farmers who were left out under the much-trumpeted loan waivers, something that was also exploited in the 2019 polls.

Violation of guidelines

In the report, it was also mentioned that a private scheduled commercial bank had received reimbursement for loans amounting to Rs.164.60 crore which was in violation of the guidelines.

Tampering of records

The report mentions that in 2,824 cases with claims amounting to Rs.8.64 crore, there was prima facie evidence of tampering, overwriting and alteration of records.

Farmers not given benefits according to entitlements

The report mentions that, almost 6 percent of the test checked accounts (4,826), farmers were not extended benefits according to entitlements. In 3,262 cases, undue benefit of Rs.13.35 crore was extended, while in the remaining 1,564 cases, farmers were deprived of their rightful benefits of Rs.1.91 crores.

Farmers not issued debt waiver/relief certificates

Debt waiver certificates entitle farmers to fresh loans, but in 21,182 accounts, there was no acknowledgement from farmers or any other proof of issue of debt waiver/relief certificates.

Lack of proper monitoring

According to the report, there was a lack of robust monitoring of the scheme.

There can be no doubt that the announced loan waivers were one of the prime reasons behind UPA winning Lok Saba elections of 2009. But looking at the CAG report, the waivers seemed like a big election stunt since it did not fulfil the very purpose it was meant to. As a matter of fact, the waivers announced in 2009 looks like another big scam under the UPA, if we go by CAG report.

Even if we look at the scene today, in Congress-ruled states, promised loan waivers are again not a reality. There are multiple media reports which are a testimony to the fact that congress party did not fulfil its commitment to the loan waivers, as promised, but only claims so. Only today, MP’s chief minister Kamal Nath said that their government doesn’t have a magic wand and waiving loan in 10 days is not possible, thus contradicting Rahul Gandhi’s pre-poll promise. So, if we see, there is a pattern: when congress announces loan waivers, it doesn’t deliver on its promise. And it often happens that the promise is made just before polls!

Read our article The Reality of Congress’ Farm Loan Waiver: Possible Scam, Lies and Cruel Joke

This video explains the hollowness of farm loan waiver promises under Congress-led governments. See here- Congress Can’t Deliver Any Benefits, Track Record Says It All