Rs 34,000 Crores Farm Loan Waiver While Tax Rate On Fuel To Go Up; CM Kumaraswamy In K’Taka Budget

The newly elected Karnataka Chief Minister, HD Kumaraswamy while presenting his maiden budget on July 5, delivered on his pre-poll promises. He announced a farm loan waiver of Rs 34,000 crores but fixed Rs two lakh as the maximum limit that can be availed by an individual farmer. Reportedly, this is only the first stage as the JD(S) election manifesto promised to write off Rs. 53,000 crore of agricultural debt.

Kumaraswamy waives off farm loans

According to ANI, while presenting the budget he said, “I have decided to waive all defaulted crop loans of farmers up to 31 December 2017 in the first stage. Farmers who repaid the loan within time, as an encouragement to the non-defaulting farmers, I have decided to credit the repaid loan amount or Rs 25,000 whichever is less.” This is one of the highest loan waiver announcements made by a state government, including Uttar Pradesh in the recent past.

I have decided to waive all defaulted crop loans of farmers up to 31 Dec 2017 in the first stage. Farmers who repaid the loan within time,as an encouragement to the non defaulting farmers, I have decided to credit the repaid loan amount or Rs 25000 whichever is less: Karnataka CM pic.twitter.com/VeRUhM3DT5

— ANI (@ANI) July 5, 2018

Before Karnataka went to elections in May 2018, the Kumaraswamy-led JD(S) party promised that it would waive farm loans which have been borrowed from both cooperatives and nationalised banks within 24 hours of coming to power. Additionally, he mentioned that Rs 1000 monthly allowance would be given to pregnant women- another promise that he did not fail to stand by.

Additionally, CM Kumaraswamy said that his government would continue with welfare schemes that were proposed by the previous Siddaramaiah-led government. The present government will add more schemes as well.

Increases tax rates of fuel

However, this farmer-centric budget has a downside as well. Kumaraswamy proposed to increase tax rates on petrol and diesel. According to Times Of India, while announcing the rate hike, he said that the tax on petrol will be increased to 32% from the present 30% while the diesel rate will be 21%, 2% more than the present rate. He added that petrol price will be increased by Rs 1.14 per litre while diesel rate will go up by Rs 1.12 per litre.

Reportedly, the budget has been increased to Rs 2,18,488 crore from Rs 2,09,181 crore which was presented by the Siddaramaiah government earlier this year, in February. Interestingly, as reported by Firstpost, the budget comes amidst debates between Congress and JD(S) over the need of a full-fledged budget.

This move also drew criticisms from the leader of the opposition in the Assembly, BS Yeddyurappa came down heavily and said that if JD(S) fails to keep up with the promises of loan waiver, all 104 of its MLAs would all go to the people with the Congress-JD(S) manifestos and say that the government has not ‘walked the talk.’

The Logical Indian Take

Farmers in India have been in a never-ending struggle where they have been demanding a number of reforms. One of their primary demands is the waiver of farmer loans. This new proposal does seem to address that problem in the sense that the already poor farmers do not have to pay the debts. However, solutions like these have become a sort of fashion for governments across the country. It is problematic because it is only a short-term solution and fails to have any prolonged effect on the problems that Indian farmers face which is evident in their repeated demands year after year.

Also Read:

• Farm Loans Worth Rs. 36,359 Crore Waived Off: UP Govt’s Big Relief To Farmers
• Ex-PM Manmohan Singh Also Gave Rs 52,000 Crore Loan Waiver To Farmers, But Did It Work?