Punjab will waive more than $1.5 billion in loans to farmers, becoming India’s third state to do so in response to growing rural distress caused by food oversupply and weak prices.
India is carrying a huge inventory of food grains from last year’s record harvest, while exports have been hit by an appreciating rupee, falling global prices and restrictions on overseas shipments.
Punjab will waive loans to farmers with holdings of up to 2 hectares and debts of up to 200,000 rupees (Dh11,364), the state finance minister Manpreet Singh Badal said in an interview.
About 975,000 farmers will be debt-free after the scheme is implemented. Punjab, a northern state that is a major producer of wheat and rice, will settle farmers’ debts to the banks through annual budget provisions, he said.
“The economy is not just about state finances, we also have to take care that our farmers do not commit suicide,” Mr Badal said.
Earlier the western state of Maharashtra and Uttar Pradesh in the north agreed to forgive billions of dollars in farm loans.
* Reuters
