Around one crore small and marginal farmers will benefit

One of the first things that the newly appointed Chief Minister of Uttar Pradesh will have to deal with is the farm loan waiver promised in the BJP manifesto for the State. Prime Minister Narendra Modi, famously against handouts, doles and loan write-offs, spoke often about this promise and that it would be announced in the first Cabinet meeting held by the new Chief Minister after taking oath.

‘Not a hollow promise’

How is the BJP planning to follow through on this promise? According to top sources in the party, the promise in the manifesto was not made off the cuff. “In our party, especially looking at the thinking of Prime Minister Modi and BJP chief Amit Shah on the question of doles and handouts, this was not a light promise to make,” said the source.

The waiver will be applicable to the one crore or so small and marginal farmers on crop loans alone. “These are loans taken to buy fertilisers or for other input costs for the crop. Not loans taken for weddings or death rituals,” said the source.

“The Reserve Bank of India (RBI) puts the figure of small and marginal farmers in Uttar Pradesh at one crore and we will go by that figure. Now the actual outlay for the waiver, in terms of money, will be decided on two factors — what is the minimum loan write-off slab fixed and the distress level of the applicant. Bahujan Samaj Party chief Mayawati had promised that loans upto ₹1 lakh or even two could be written-off if her party was to be voted to power, but that is not what we are looking at. These are specifically for crop loans as they are called. We don’t expect the outlay to be more than ₹10,000 crore or thereabouts,” said the source.

The financial outlay of the loan waiver, however, is not the only concern for the BJP. Senior party leaders fear that the U.P. case would lead to other BJP-ruled States making a similar demand. Maharashtra Finance Minister Sudhir Mungatiwar, for example, while tabling the State budget on Saturday made a similar demand.

Reflecting this concern, Union Agriculture Minister Radha Mohan Singh too clarified through a series of tweets that the farm loan waiver in U.P. was a State-specific promise. “The U.P. unit of the BJP spoke of a farm loan waiver in their election manifesto, it is not in the national manifesto of the BJP. If a State government from its own funds wants to waive loans for small and marginal farmers it should be welcomed,” he said.

The promise of a loan waiver for farmers was a departure for the BJP with regard to its policy profile, but the party is determined that this departure remains within the limits of fiduciary responsibilities of the state government.