Gujarat Announces Interest-Free Farm Loans Of Up To Rs 3 Lakh

Ahead of state assembly polls, the Gujarat government has announced it will provide farm loan up to Rs 3 lakh at zero percent interest, a move that will benefit around 25 lakh farming families.

At present, Gujarat has a 7 percent interest on farm loans, of which 3 percent interest relief is given by the Centre, while 3 percent relief is provided by the state government, bringing the effective interest rate to be paid by farmers at 1 percent.

"...Till now, they (farmers) were charged 1 percent, whereas the state and Centre used to bear the remaining 6 percent interest. For the welfare of around 25 lakh farming families, I hereby announce that 1 percent would be waived too,” Chief Minister Vijay Rupani said yesterday at a BJP rally in Gandhinagar.

The move is likely to cost over Rs 700 crore to the state exchequer.

Earlier, four Indian states waived farm loans. Following up on its election promise, the BJP government in Uttar Pradesh pardoned farm loans worth Rs 36,000 crore in April. Maharashtra, Punjab and Karnataka followed with either full or partial waivers.

Reserve Bank of India Governor Urjit Patel had earlier warned that waivers pose risks to inflation and credit discipline. Ratings agencies Fitch and Moody's have both flagged off concerns of undue burden on the states' exchequer.

Also Read: Loan Waivers Show Farming Is Uneconomical, Says Father Of India's Green Revolution

Gujarat Polls: A Battle of Pride

BJP chief Amit Shah termed the upcoming Gujarat Assembly polls a "battle of pride" for the ruling party and exhorted the workers to ensure an improved tally of 150 seats over the 129 it won in 2002 under the then chief minister Narendra Modi.

Shah slammed the Congress and asked BJP cadres to completely “root out” the party from the prime minister's home state.

Speaking before Shah, Modi praised his trusted lieutenant as the “man of the match” for the BJP's victory in the 2014 elections and also in the assembly polls held in Uttar Pradesh this year.

The BJP president urged his party cadres to not sit idle and reach out to every citizen after Diwali to ensure a landslide victory.

He appealed to BJP workers to ensure that the party wins three-fourth majority in the polls, due in December this year.

“This is a battle of pride for us, as we want nothing short of three-fourth majority. As your president, I urge all party workers to give your 100 per cent. Do not sit idle after Diwali. I urge you to reach out to each and every citizen and spread Modiji's message of development,” Shah said while addressing "Gujarat Gaurav Mahasammelan".

Also Read: India's Non Farm-Loan Debts Could Settle All Distressed Farm Loans

The rally was held a day after the conclusion of the party's 'Gujarat Guarav Yatra' aimed at mobilising public support ahead of the Assembly polls.

Noting that a two-third majority will not suffice this time, Shah recalled that the BJP had secured 129 seats when Modi was chief minister in 2002. “And now, when he is our prime minister, we must make and all-out bid to clinch 150 seats (out of the 182 in the Assembly),” Shah said.

He accused the Congress of showing "fake" concern for Gujarat without naming Congress vice president Rahul Gandhi who has been addressing rallies in various parts of the state and visited a number of temples.

Also Read: Farm Loan Waiver May Push Inflation By 0.2% Permanently: RBI Paper