The Downside of Repeated Debt Waivers

The Downside of Repeated Debt Waivers

Debt waivers are supposed to help farmers make agricultural investments, repay future debts and tackle any other situation. But the history of waivers in India tells a different tale.

Credit: PTI

Credit: PTI

India is facing an agrarian crisis. There is no doubt that the majority of the small and marginal farmers are indebted. According to the Reserve Bank of India, the amount of outstanding loans given out for agricultural and allied activities by the regional rural banks has increased from Rs 1.80 billion in 1980-81 to Rs 1329.67 billion in 2015-16. According to the 2009 India Human Development Survey, the average outstanding loan for a household was above Rs 50,000. The most popular and yet most debated public policy response to tackle this problem of spiraling farm debts in India has been debt waiver programs.

The theoretical argument in support of debt waiver policies originated in the macroeconomic context of debt relief programs for low income countries. For instance, Bolivia received on average $614 million in foreign aid per year between 1998 and 2002 towards debt relief. These numbers went up further in recent years. Sachs, in his 1989 work, argues that a very high level of outstanding debt reduces the incentive for the debtor to exert effort to repay, a concept captured by the Debt Lafer Curve. Krugman shows that in such a situation a policy of debt forgiveness could induce the optimal level of effort from the debtor and maximise repayment. A similar logic can be borrowed in a microeconomic setting like the agricultural loan waivers. Farmers who run into huge debts, due to uncertainties associated with agriculture, are less likely to be able to come out of the debt trap without any help from outside. Debt waivers are supposed to help the farmer come out of the unforeseen situation, make agricultural investments and be able to repay future debts. The problem arises though, when we consider the specific history of farm loans waivers in India.

A typical agricultural loan contract in India uses land as collateral, which are freed once the loans are repaid. Loan waivers protect households from confiscation of their land by credit institutions in case of default. Effectively, the practice of repeated loan waivers, announced in the wake of state level elections, have contributed towards shaping an expectation among farmers about government intervention to free up their collateral in case of default. This has led to a loss of credibility in the enforcement of loan contracts between the farmers and the banks. The hope for future loan waivers is likely to have generated incentives among farmers to utilise agricultural loans for unproductive purposes and adversely affect agricultural investments.

While the debate regarding efficacy of loan waivers has gained momentum in recent times, agricultural loan waiver programs have been around for a while in India. In 1990, Prime Minister V.P. Singh announced a waiver of up to Rs 10,000 for agricultural loans per household. It cost the government Rs 100 billion to complete the waiver and it took the banks, involved in the scheme, nine years to recover the funds from the government. In the same year, the then chief minister of Haryana, Devi Lal, announced a Rs 2275 million waiver for both cooperative and commercial bank loans. In 2008, the UPA government announced one of the largest debt waiver schemes in the history of India, the Agricultural Debt Waiver and Debt Relief Scheme (ADWDRS). ADWDRS became the most prominent waiver program, at least partly because of its size – a massive Rs 716 billion. It also served as a precursor to the series of state level waiver schemes that followed. In November 2011, the Samajwadi Party government announced a debt waiver of Rs 17.20 billion for Uttar Pradesh, while the Andhra Pradesh (TDP party) and Telengana (TRS party) governments came up with their own waiver packages of Rs 240 billion and Rs 170 billion respectively in 2014-15. In 2016, the AIDMK party announced its waiver package of Rs 57.8 billion for Tamil Nadu as part of its election manifesto. Despite having the second largest fiscal deficit last year, when the BJP won the elections in UP, the state once again had a debt waiver package ready to be implemented. The BJP’s electoral manifesto had committed to write off loans of small and marginal farmers, which would approximately cost the government Rs 370 billion. The states of Maharashtra, Madhya Pradesh, Punjab, Haryana, Tamil Nadu and Gujarat are also in the pipeline to announce their own loan waiver packages, taking the cumulative loan waiver amount in the year 2016-17 to approximately Rs 3200 billion, equivalent to 2.6% of the country’s GDP.

Despite large sums of money being spent on these programs, little is known about their effectiveness. Are they really helping the farmer increase their productivity and pull them out of the debt trap?

Uttar Pradesh debt waiver scheme

To understand how potential beneficiary households respond to repeated waiver programs, we evaluated the UP Rin Maafi Yojana (UPRMY) announced in recent research (Chakraborty and Gupta 2017). Under UPRMY, a household qualified for a waiver based on the amount of loan borrowed and repaid. A timeline of the roll out of the waiver program can be seen in Figure 1.

 

Figure 1: Map depicting phased implementation of the UPRMY

Under the UPRMY, approximately Rs 1700 crore was disbursed as debt relief covering approximately 7.3 lakh farmers from 74 districts. The program was rolled in a phased manner over a period of three years from 2012-2015. About 42 districts received the relief package in 2012-13. In 28 districts, the program roll out happened in 2013-14. The remaining four districts received the waiver in 2014-15. Figure 2 tells an interesting story. Irrespective of which district received the waiver in which year, repayment rates fell dramatically right after the announcement of the waiver program, across all districts of UP. The average rate fell from 25%-50% in 2010-11 (pre-announcement) to 10%-25% in 2011-12 (post-announcement).

Consumption and investment behaviour of eligible vs. non-eligible households

We analyse the change in household behavior following the UPRMY using primary data collected in 2015 from 5,270 individuals in 770 households across six districts of UP. The districts were chosen to include regions from different phases of the program roll-out. Auraiya and Kanpur Dehat received the waiver in 2012-13. Agra and Firozabad received the waiver in 2013-14. We also include Lakhimpur, the only district that did not receive the waiver at the time of data collection and Sitapur, which received the waiver in 2012-13 and is adjacent to Lakhimpur. In each district a household qualifies for loan waiver if it had borrowed an agricultural loan of up to Rs 50,000 from the UP Gramin Vikas Bank. Further, the household was required to have repaid at least 10% of the borrowed amount on or before the programme announcement date.

Table 1: Household Behaviour In Response to UPRMY

Variable Received Loan Waiver Not- Received Loan Waiver
Consumption 41479 32728
Productivity 29397 38690
Income 52623 59051

Note: Consumption, is the yearly consumption expenditure in rupees; Income, is the annual income of a household; Productivity refers to the value of total production over farm size.

The average consumption value of households that received the loan waiver is roughly Rs 41,000, much higher than those of households who did not receive the waiver. This is in spite of the fact that the households that did not receive the loan waiver had a higher income and a higher level of agricultural productivity.

We delve deeper in to this apparent evidence of moral hazard using more rigorous statistical techniques. We compare differences in consumption and investment decisions between potentially eligible and not eligible households in districts that received the waiver vis-à-vis the differences between potentially eligible and not eligible households in districts that did not receive the waiver.

Our findings suggest that eligible households in districts that received the waiver had higher consumption expenditure, approximately by Rs 8,000 per year, as compared to non-eligible households. What is of greater concern is that eligible households also tend to spend significantly more on social events such as weddings, family occasions and so on. In addition, we find that eligible households had no significant productivity gain as a result of receiving the debt waiver compared to non-eligible households. Given that households in the same districts face similar agricultural shocks the insignificant productivity difference between eligible and not-eligible groups suggests a failure of the program to achieve its desired goals.

Rethinking policy interventions

Eligibility of households for loan waiver frees them up from debts and builds expectations of future credit availability. Consequently, the need to arrange for debt repayment falls. In other words, our results indicate, repeated debt waiver program have led to willful defaults. Farmers borrow from banks for agricultural investment but do not undertake the investment. Instead they use up the loan for consumption and are unable to repay the debt in the future. These findings, coupled with Figure 2 suggest that blanket waiver schemes lead households to stop repaying debts irrespective of their waiver eligibility status. This could be detrimental for the financial sustainability of this line of policy. It is important to note, however, that our findings do not speak against loan waiver programs altogether. Rather they warn against implementation of loan waiver programs based on simplistic eligibility rules that do not account for the actual needs of the farmers and the agricultural shocks they have faced. The agricultural sector in India is still vastly affected by scanty rainfall, poor irrigation facility and loans from private moneylenders with high rates of interest. A majority of the defaults could be a genuine disability to pay back due any of these reasons. However, a more thorough understanding is required regarding the effectiveness of different interventions. An alternate policy to explore is agricultural insurance which has seen an extremely low take up rate from farmers so far.

Tanika Chakraborty is assistant professor of Economics at the Indian Institute of Management, Calcutta, on leave from Indian Institute of Technology, Kanpur. Aarti Gupta, an angel investor by profession, has a Phd in Economics from IIT Kanpur, with her doctoral thesis on Loan Waivers in India.

Telangana Cooperatives Act 2016

The Andhra Pradesh Mutually Aided Cooperative Societies Act, 1995 came in response to an understanding  in the state government, that the policy and legislative environment for investment sensitive, investor owned and controlled business was being increasingly opened, while usage-sensitive, user owned and controlled business continue to be very tightly controlled. In order for rural producers and others to engage with labour, financial, commodity markets effectively, it was understood that disadvantages communities needed a more liberal cooperative law.

However, the G.O.28 significantly takes away the spirit of autonomy available in the AP Mutually Aided Cooperative Societies Act, 1995. The G.O. assuming that cooperatives as “peoples” institutions – Cooperatives are not peoples’ organisations; they are their members’ institutions. The GO restores some of the key provisions to the department of cooperation (excluded in APMACS Act 1995) that have been used over decades to control cooperatives. These provisions include:

  1. The Government is competent authority to make provisions, from time to time, take necessary steps for making provisions with respect to the incorporation, regulation and winding up of co-operative societies based on the principle of voluntary formation, democratic member control, member economic participation and autonomous functioning as deemed necessary – which goes against the spirit of the right to form cooperatives. The bylaws of the cooperative could be compulsorily amended, again, even against the general body’s resolution to the contrary. Earlier this provision was almost always used to exempt the government or the registrar from fulfilling responsibility, such as the timely conduct of elections, audit.
  2. The powers given to the Registrar for registration and renewals which is against the spirit of the right to form cooperative. If Cooperatives are filing returns, it is the responsibility of registrar to verify and take measures at their level. Why do they go for renewal? The department as well as cooperatives would develop a vested interest.
  3. Admission of members and removal from membership and intimation to Registrar within 30 days: Government can make effort to ensure that the registrar would play its role in enable the cooperatives, and then regulate only where regulation was imperative. But keeping these types of provisions would undermine the functions and role of the management of cooperative societies.
  4. Size and term of the Board: The 1995 Act has sought, through this provision, to prevent to the extent possible, any vacuum in management, which has been experienced under the 1964 Act, to bring in the dreaded “Person-in-Charge” for the interregnum. By having less than half the directors retiring at any time, the 1995 Act has tried to ensure that there is always a quorum, and a democratically elected body is in position.
  5. Functional directors in the Board: Coopt persons as the functional directors to the Boards of cooperatives, and resolutions of the board could be annulled, if the nominated directors were uncomfortable with them. This means, all the cooperatives are in the hands of “professionals”. These people will have influence on decision making of the board without having membership responsibilities, ownership on the affairs of cooperative, accountability and liability of financial results of the cooperatives
  6. Conduct of elections: Based on experience, It is simply not possible for any third party to organize elections to all tiny and large cooperatives when their elections fall due.  It is also not possible for them to print ballot papers with specific symbols chosen by candidates of each cooperative – the result is that ballot papers are printed en mass; common election dates are fixed for similar type of cooperatives; the fixing of common dates requires the deliberate withholding of elections where those have become due, for ease of management by the external party; politicisation takes place as media and parties begin to get involved in the results of a large number of cooperatives going to elections on the same day. In fact, the cost of elections shoots up as centralized printing, security arrangements, TA/DA of officers, etc, are all to be borne by the cooperatives. Further, centralized elections reinforce the misconception that cooperatives are state agencies.
  7. It is responsibility of every cooperative society to conduct member education programs based on their activities, need and importance. What way TSCU is concerned about it. Who will bear the certification cost? Who is benefiting from this clause???
  8. All amendments to bye-laws require registration in this GO. The company law requires registration only to changes in the memorandum (which provides the ‘identify’ of a company). Amendments to articles only required filing of the amendment for record. This is why, in the 1995 Act, amendments to only key provisions were listed for registration- the rest were to be sent for taking on record only.
  9. Registrar’s role to fix the staffing pattern, qualifications, pay scales and other allowances to the employees of the society; this will undermine  functions & role of management. If registrar is involved, staff of cooperatives, feel more privileged in society than accountable to the cooperatives that they work with.
  10. Supersession of the Board and appoint the official Administrator(s) to manage the affairs of the society: Elections to cooperatives were not their own business – they are conducted by the registrar, under government fiat. Where other provisions had rendered the cooperative impotent in its business, provisions related to elections made the cooperative a potent political instrument in the hands of the party in governance, for accommodating party workers who could not be made legislators. Elections were withheld for years in most states, and often held under court directions.Elected boards could be superseded by the government/registrar on any  number of times either for serious or frivolous charges, based on ‘the opinion of the registrar’. In this case, restraining the board for not conducting elections on time as per their bye-laws is contradicting.
  11. Dissolution by Registrar: A  cooperative is a creature of its members, and, therefore, it provides for the members to choose not to continue their association with one another, to dissolve their cooperative.
  12. Settlement of disputes by registrar: If the registering authority is given the right to unilaterally dissolve a cooperative on any of these counts, as such right may lead to unhealthy practices.

In the 1995 Act, the approach was to ensure that the department would not develop a vested interest in cooperatives, even while it had some core corrective measures in its hands. The effort was to ensure that it would play the role of registration, and then regulate only where regulation was imperative, and that these functions would not be undermined by any management role.

Download

  1. 160601 Letter to Commissioner for Co-operation & Registrar of Co-operative Societies, Govt. of Telangana
  2. 2016AGLC_MS28

Delhi’s organic farming shocker: Data a load of manure

Mail Today Bureau   |   Mail Today  |   New Delhi, March 26, 2015 | UPDATED 06:03 IST

According to the state department, there is hardly any activity of organic farming on Delhi’s land . It claims it gets no subsidy for for organic farmers.Believe it or not, almost 70 per cent of the national Capital was used for organic farming in 2011-2012, according to National Project on Organic Farming (NPOF), which comes under the Ministry of Agriculture. While the total geographical area of Delhi is 1.48 lakh hectares, NPOF data shows 100238.74 hectares (almost twice the size of Mumbai) was used for organic farming during that period.

What smacks of data fudging and a gigantic scam took place between 2009 and 2012 when the Sheila Dikshit government was in power in Delhi and Congress-led UPA ruled at the Centre. As per the central government scheme, a subsidy of Rs.10,000 per hectare of land is given to a farmer for organic farming. Hence, Rs.100-crore plus subsidies in 2011-12 were given by the Union government for organic farming in the national Capital for 100238.74 hectares. And Delhi, on paper, produced 4,765 tonnes of organic products in 2009. The state of Assam produced 2,329 tonnes. In other words, urban Delhi’s output of organic products was 100 per cent higher than that of Assam. The scam was exposed by the Crop Care Foundation of India (CCFI) through an RTI.

When MAIL TODAY asked the Ministry of Agriculture if indeed such gigantic tract of land inside Delhi has been used for organic farming or if the national capital is such a big producer of organic vegetables, we got no answers. Neither did the Commerce Ministry which is in charge of export of organic products come up with any answers. Both ministries passed the buck and pointed fingers at each other.

The Delhi Agriculture department says there is hardly any organic farming done in Delhi. “There is no awareness about organic farming in Delhi. We don’t get any specific data on such farming from the government. Neither do we get any subsidy,” an official from the department told MAIL TODAY. Delhi agriculture department records show 30,922 hectares of land were used for overall agricultural activities in Delhi in 2011-12. Agriculture activity in Delhi takes place only on six blocks, out of which there is negligible farming in 50 per cent of the area. NPOF was introduced by the Congress-led UPA government during the 10th five-year plan as a central sector scheme with effect from 10 October, 2004, with an initial outlay of `57 crore for promotion of organic farming in India. Though introduced by the UPA government, the scheme continues till date with substantially enhanced budget.

Dr Krishan Chandra, Regional Director, National Center for Organic Farming (NCOF), Ministry of Agriculture, said: “Agriculture is a state subject. The Centre’s role is to help states monetarily so that they can take up organic farming. We have different schemes through which we help farmers by providing money to states. But there is no scope of organic farming in Delhi as there is meagre land available for any kind of farming. As far as subsidy is concerned, we give subsidy for the export of organic produce.” According to the data available with the Ministry of Agriculture, the annual export value of Agriorganic products for 2012-13 was Rs.1155.81 crore.

Dr Chandra said that on noticing major glitch in the data provided by the Agricultural and Processed Food Products Export Development Authority (APEDA), under the Ministry of Commerce, regarding organic farming in Delhi, he asked them for clarification.

“The data regarding land for organic farming is maintained by APEDA and not by our department. They said that earlier they used to enter the data manually but now they are doing it using computers. There may be some data manipulation as it is not possible to carry out such large-scale organic farming in Delhi,” said Chandra. “At times the state helps the farmer financially to carry out organic farming. Farmers furnish address details of the national capital, but the land is somewhere else. The responsibility to check such details furnished by farmers lies with the Commerce Ministry,” he said. Sources in the Agriculture Ministry said that there is a possibility of embezzlement of funds at the state level because who the beneficiaries would be are decided by the state.

The state agriculture department claims to have no information on organic farming in Delhi. “We don’t have any information,” said Kaushal Kishore, joint director, agriculture, Development department, Delhi government. Rajinder Chaudhry, Director (Media), Ministry of Commerce, said: “We are not aware about the disparity in data from other sources. The data provided by APEDA is sourced from TRACENET – a web-based traceability system operational under NPOP.”

రాజధాని కి ముప్పై వేల ఎకరాలు అవసరమా?

Land Grab

హర్ష గజ్జారపు

a) ప్రపంచ అతి పెద్ద ప్రజాస్వామ్యం చిహ్నమయిన ‘భారతీయ ప్రలమెంటరీ భవనం’ కేవలం 9.8 ఎకరాల మొత్తం ప్రాంగణంలో కేవలం 6 ఎకరాలలో నిర్మించబడింది.
b) అగ్రరాజ్యం అమెరికాలోని ‘వైట్ హౌస్’ కుడా కేవలం 18 ఎకరాలలో నిర్మించబడింది.
c) హైదరాబాద్ లోని అసెంబ్లీ, సెక్రటేరియట్, MLA క్వాటర్ మరయు ఇతర అభికారుల భవానాలు అన్ని కలిపి కేవలం 250 ఎకరాలలో నిర్మించబడ్డాయి.

వీటినిబట్టి, కొత్త  నిర్మాణానికి అసలు “30,000 ఎకరాల భూమి” ఎందుకుకావాలి..??

30,000 ఎకారాలంటే, సుమారు 121 చదరపు కిలోమీటర్ల విస్తీర్ణత.
బెంగుళూరు లోని విధాన్ సౌధా, MLA క్వాటర్ మరయు రాజ్ భవన్ అన్ని కలిపి కేవలం 1.5 చదరపు కిలోమీటర్ల విస్తీర్ణతలో నిర్మించబడ్డాయి.
మరి, కొత్త రాజదానికి 30,000 ఎకారాలు (121 చదరపు కిలోమీటర్ల విస్తీర్ణత) భూములు అవసరమా.??

30,000 ఎకారాలు (121 చదరపు కిలోమీటర్ల విస్తీర్ణత) అంటే, అది విజయవాడ-గుంటూరు రెండు నగరాలను కలపగా వచ్చే విస్తీర్ణత కంటే ఎక్కువ!
దేనికోసం అంత భూమి.??

దానికి తోడు, ఆ పొలాల్లో నాలుగు పంటలు పండుతాయి.
ఆ భూముల్లో 20 అడుగుల్లోనే నీరు ఉంటుంది.
ఐదేళ్లుగా వర్షం పడకపోయినా, ఆ భూముల్లో బంగారం లాంటి పంటలు పండుతున్నాయి.

ఇటువంటి అమూల్యమైన వ్యవసాయ భూములను, రైతులనుండి లాక్కొని, వారికి నష్టం కలిగించేలా, వారి జీవనోపాధి దూరంచీసి, వారి భూములను రియల్ ఎస్టేట్ వ్యాపార-బిల్డర్లకు కట్టబెట్టడం, ‘ధర్మమా’..??

హామీ…మాఫీ

మోహన్ రుషి

ముఖ్యమంత్రిగా చంద్రబాబు అధికారం చేపట్టి ఐదు నెలలు పూర్తయింది. కానీ గెలవగానే తొలి సంతకం చేస్తానంటూ ఎన్నికల్లో ఆయనిచ్చిన హామీ మాత్రం ఇప్పటికీ నెరవేరలేదు. తమ పార్టీ గెలిస్తే రైతు రుణాలన్నీ మాఫీ చేస్తానని, తొలి సంతకం ఆ ఫైలుపైనే అని చెప్పిన చంద్రబాబు చేసిందేంటో తెలుసా?  ఎలా చేయాలో చెప్పండంటూ ఓ కమిటీని మాత్రం వేశారు. ఆ తరవాత మాఫీపై ఎన్ని మాయదారి ఫీట్లు వేశారో తెలుసా? అడుగడుగునా ఆంక్షలు విధించారు.
సాధ్యమైనంత ఎక్కువ మంది రైతులకు ప్రయోజనం కల్పించాల్సిన ముఖ్యమంత్రి… వీలైనంత ఎక్కువ మందిని ఈ మాఫీ పరిధి నుంచి తప్పించడానికి బోలెడంత కసరత్తు చేశారు. ఆ ఫీట్ల ఫలితమేంటో తెలుసా? రైతులకు ఇప్పటికీ ఒక్క రూపాయి మాఫీ కాలేదు. సరికదా… రాష్ట్రంలోని రైతులు, డ్వాక్రా మహిళలపై ఇప్పటికి దాదాపు 17,500 కోట్ల వడ్డీ భారం (16 నెలలకు) పడింది. రుణ మాఫీ విషయంలో ఏపీ సీఎం చంద్రబాబు మాయదారి ఫీట్ల తీరుతెన్నులు మీరే చూడండి…
బాబు ఏ సందర్భంలో ఏం చెప్పారో… తరవాత ఆ మాట ఎలా తప్పారో ఒక్కసారి చూస్తే…
►రైతులు, డ్వాక్రా మహిళల రుణాలన్నింటినీ మాఫీ చేస్తామని ఎన్నికల ముందు హామీ ఇచ్చారు. టీడీపీ ఎన్నికల ప్రణాళికలో కూడా ఇదే హామీని పొందు పరిచారు. ళీ ముఖ్యమంత్రిగా ప్రమాణం చేసిన వేదికపై రుణాలు మాఫీ చేస్తూ సంతకం పెట్టలేదు. రుణాల మాఫీ విధివిధానాల ఖరారు కోసం కోటయ్య కమిటీని ఏర్పాటు చేస్తూ ఆ ఫైలుపై సంతకం చేశారు.
►కోటయ్య కమిటీ నివేదిక ఇవ్వక ముందే మంత్రులు మాట్లాడుతూ.. రుణ మాఫీకి ఆధార్ లింక్ పెడతామన్నారు. ఆ తర్వాత లక్ష రూపాయల వరకే మాఫీ అన్నారు. మరోసారి లక్షన్నర వరకు మాఫీ అన్నారు. మరో మంత్రి బంగారంపై తీసుకున్న రుణాల మాఫీ సాధ్యం కాదని చెప్పేశారు.
►ఇక ముఖ్యమంత్రి జూన్ 22న కోటయ్య కమిటీతో నిర్వహించిన సమీక్షలో ‘రుణ మాఫీ తర్వాత చూద్దాం. ప్రస్తుతానికి గత ఖరీఫ్‌లో కరువు, తుపాను ప్రభావిత 575 మండలాల్లో రైతుల రుణాలను రీ షెడ్యూల్ చేయిద్దాం.
►ఆర్‌బీఐ గవర్నర్‌తో మాట్లాడండి..’ అంటూ ఆదేశించారు. ళీ జూన్ 29న రాష్ట్ర స్థాయి బ్యాంకర్ల కమిటీ సమావేశంలో వ్యవసాయ రుణాలు రూ.87,612 వేల కోట్లు, మహిళా సంఘాల రుణాలు రూ.14,204 వేల కోట్లు ఉన్నట్లు తేల్చారు. ళీ ఆర్‌బీఐ ఎగ్జిక్యూటివ్ డెరైక్టర్ రాష్ట్ర ప్రభుత్వానికి లేఖ రాస్తూ రైతు రుణ బకాయిలను రాష్ట్ర ప్రభుత్వం ఒకేసారి బ్యాంకులకు చెల్లిస్తే రుణ మాఫీకి అభ్యంతరం లేదన్నారు.
►కోటయ్య కమిటీ ఆర్‌బీఐతో రుణాల రీ షెడ్యూల్‌పై జరిపిన చ ర్చలు విఫలం అయ్యాయి. ఆర్‌బీఐ కేవలం నాలుగు జిల్లాల్లో 120 మండలాల్లోని పంట రుణాల రీ షెడ్యూల్‌కే అనుమతించింది.
►జూలై 21న కోటయ్య కమిటీ ముఖ్యమంత్రికి నివేదిక అందజేసింది. అదేరోజు చంద్రబాబు విలేకరులతో మాట్లాడుతూ ఈ ఏడాది మార్చి నెలాఖరు వరకు ఉన్న వ్యవసాయ రుణాలను మాఫీ చేస్తామని ప్రకటించారు. ఒక్కో కుటుంబానికి లక్షన్నర వరకు మాఫీ చేస్తామన్నారు. డ్వాక్రా సంఘాలకు మాఫీ చేయబోమని, మూల ధన సాయంగా ఒక్కో సంఘానికి లక్ష రూపాయల వరకు ఇస్తామని చెప్పారు.
►ఆగస్టు 14న మాఫీకి పలు ఆంక్షలు విధిస్తూ ఆర్థిక శాఖ మార్గదర్శకాలను జారీ చేసింది. గత ఏడాది డిసెంబర్ 31వ తేదీ వరకు తీసుకున్న పంట రుణాలు, బంగారం కుదవ పెట్టి తీసుకున్న వ్యవసాయ రుణాలు, ఆ రుణాలపై ఈ ఏడాది మార్చి వరకు అయ్యే వడ్డీ కలిపి ఒక్కో కుంటుంబానికి లక్షన్నర వరకు మాఫీ పరిధిలోకి వస్తాయని అందులో పేర్కొన్నారు.
►ఆర్థిక శాఖ తొలి మార్గదర్శకాలను సవరిస్తూ ఈ నెల 1న మరో జీవో జారీ అరుుంది. దాన్లోనూ గత ఏడాది డిసెంబర్ 31వ తేదీ వరకు తీసుకున్న రుణాలకు, అప్పటిదాకా వడ్డీకి మాత్రమే మాఫీ అంటూ వడ్డీలోనూ కోత పెట్టారు.
►23 అంశాలతో రూపొందించిన నమూనా పత్రంలో బ్యాంకులు రైతుల ఖాతాల వివరాలను రాష్ట్ర ప్రభుత్వం రూపొందించిన ప్రత్యేక వెబ్‌సైట్‌కు అందజేయాలని పేర్కొన్నారు. ఆ గడువు ఈ నెల 1తో ముగిసింది. చివరకు బ్యాంకులు చచ్చీచెడీ మొత్తం డేటాను అందజేసినా… మాఫీకి అర్హులైన వారి జాబితాను ఇంకా ప్రకటించలేదు

New Land Acquisition Act – Rules for Social Impact Assessments and Consent Provisions Notified (Relative Progressive Rules – Can also be a useful guide for EIA Processes)

New Land Acquisition Act – Rules for Social Impact Assessments and Consent Provisions Notified (Relative Progressive Rules – Can also be a useful guide for EIA Processes)

 

The NDA government – amidst speculations that it is set to dilute important provisions of the new land acquisition act – has recently notified the Rules for two of its most important and progressive sections, those pertaining to the Social Impact Assessments and the Consent provisions. These Rules, notified on 8th Aug 2014 detail out how to implement these two provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 which is the full and formal name of the new Land Acquisition Act( referred to hereinafter as Act).

Overall, these Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Social Impact Assessment and Consent) Rules, 2014 (Rules hereinafter) provide a relatively progressive framework of implementation.

Provisions for Social Impact Assessment

There are some significant provisions for carrying out the SIA. First and foremost, the Rules require that the SIA be carried out in consultation with the local self-government institutions in the affected area. This provision is also there in Act.

The Rules require the state or the central government to establish a Social Impact Assessment Unit, “an independent organisation which shall be responsible for ensuring that Social Impact Assessments are commissioned and conducted by such person or bodies other than the Requiring Body as per the provisions of the Act”. (Emphasis added). This is a critical provision for maintaining the credibility of the SIA. Here, a lesson seems to have been learnt from the problems with the Environment Impact Assessments (EIA) process, where the project proponent selects, commissions and pays the agency that carries out the EIA. This creates a direct conflict of interest, and it’s not surprising that most EIAs are highly biased towards the project proponent’s interests.

The Rules empower the SIA Unit to formulate the Terms of References for any SIA proposal, list the activities required, decide the size and profile of the team required, and prepare the costs estimates for the same. Then, the Requiring Body (the agency that wants the land) will deposit the money with the Government, and the SIA Unit will select the agency to carry out the assessment from the roster that it maintains.

To further ensure a distance between the Requiring Body and the SIA team, the Rules explicitly state that the Requiring Body shall not be involved in any way in the appointment of the SIA agency, and that it should be ensured that there is no conflict of interest involving the team members of the SIA agency.

The Rules allow the SIA team to include independent practitioners, academics, qualified social activists, and mandate the inclusion of at least one woman member.

The SIA Unit is also tasked with building and “continuously expand a Database of Qualified Social Impact Assessment Resource Partners and Practitioners”, “conduct training and capacity building programmes for the Social Impact Assessment team and community surveyors”, and “continuously review, evaluate and strengthen the quality of Social Impact Assessments and the capacities available to conduct them”.

Apart from giving a detailed list of the aspects that the SIA must cover, which include all direct and indirect impacts, the Rules also require the SIA to “assess the viability of impact mitigation”. This is critical because often, the mitigation measures are just listed out as a lip service and the project cleared on this basis, but the affected people suffer because it is practically impossible to carry out the measure effectively particularly when the displacement involves large numbers.

In this context, it is also important that the Rules require the SIA to “provide an assessment as to whether the benefits from the proposed project exceed the social costs and adverse social impacts that are likely to be experienced by the affected families or even after the proposed mitigation measures, the affected families remained at risk of being economically or socially worse, as a result of the said land acquisition and resettlement”.

There are several other important provisions including the time period for the SIA (six months), recording the views of the affected families in writing, involving local voluntary organisations and media in the public hearings, recording and considering in the SIA every objection raised in the public hearings, the SIA and public hearings to be in local language and a web-based flow management information system of the acquisition process.

The Consent Provision

The Consent related Rules specify that the Consent process shall be carried out by the Government, through the District Collector. The consent would be obtained (where required by the Act) at two levels – the Gram Sabha level and for the private and public-private partnership projects, at the individual land owner levels.

For getting the consent from the Gram Sabha, the quorum requirements not only ask for 50% of the total members to be present, but also require that one third of total women members also to be present.

The Rules specify that negotiated terms for rehabilitation, compensation, impact management and mitigation which the Requiring Body has agreed to, shall form a part and parcel of the Consent Agreements. This means that the Consent is given only against these commitments.

It also declares that any attempt to coerce or threaten anyone into giving consent shall be treated as a criminal offence, and most important, if any such threat has been made, the consent so given shall be void.

Two Caveats

Of course, these Rules cannot and do not transcend the fundamental problems with the original Act itself (see here  for a detailed account of these), but within that limitation, provide a much better process than has been available earlier for project affected people.

Second, it’s a question as to whether and how long these Rules will survive, as the very provisions that these Rules help actualise are the ones that the Central Government seems to want to do away with. However, till such an eventuality, these Rules will be the ones that will provide the framework for implementation of the Act.

A Lesson for the MoEF

All in all, even with several limitations, these Rules provide a process of SIA that is miles ahead of all earlier processes. Indeed, at this time, the Ministry of Environment and Forest is examining all the environment protection laws, and it could do well to adapt all these provisions of the SIA for the EIA process too.

22 September 2014

The Rules can be downloaded from http://dolr.nic.in/dolr/downloads/pdfs/RFCTLARR%20%28SIA%20and%20Consent%29%20Rules%202014.pdf

Telangana Government GO on Crop Loan Waiver

140813 Loan Waiver GO Telangana

The eligible amount for debt waiver would be limited to the amount of loan (together with applicable interest), which is disbursed and outstanding as of 31st of March, 2014 or Rs.1,00,000 per farmer family whichever is lower. The farmer family is defined as head of the family, spouse and dependent children.
The following loans/accounts shall not be eligible under the Crop Loan Waiver Scheme.
a) Advances against pledge or hypothecation of agriculture produce other than standing crop
b) Tied loans
c) Closed crop loan accounts
Short term production loan means a loan given in connection with the raising of crops which is to be repaid within 18 months. It will include working capital loan, for traditional and non-traditional plantation and horticulture.

Implementation Guidelines of the Scheme
a) Preparation of list of farmers with outstanding crop loan dues and arriving at the amount of claim

i) Each lending institution – bank branch – which has disbursed short term crop loans to farmers shall prepare village-wise list of farmers with outstanding crop loan dues as on March 31, 2014 in the prescribed format (Annexure-A).

ii) Each lending institution, shall also prepare a village-wise list of farmers who have outstanding dues as on March 31, 2014 in respect of crop loans taken against gold in the prescribed format (Annexure-B).

iii) The list of farmers in Annexure-A and Annexure-B should be compared by the Bank Branch Manager and a final list of farmers who have outstanding crop loan and limited to a maximum extent of Rs.1.00 lakh should be prepared by the Bank Branch Manager in the format designed in Annexure-C. One copy of Annexure-A, B, C should be sent by the Bank Branch Manager each to LDM and District Collector.

iv) Some of the farmers might have taken crop loan/agriculture gold loan for crops from more than one bank branch of same bank or another bank. Hence, for eliminating the duplication/multiple financing and restricting the benefit of loan waiver of Rs.1.00 lakh per farmer family, a Bankers meeting at Mandal level will be convened by the JMLBC (Joint Mandal Level Bankers Committee) Convener. At the JMLBC meeting all the Banks will come with the lists of eligible farmers prepared in the proforma as in Annexure-A, B & C prescribed by the Government, and compare the list of farmers in Annexure- C with Annexure- C list of other bank branches in the mandal belonging to all the other banks (commercial, rural, cooperative). The mandal Tahsildar will also check all names in Annexure- C of all banks in the mandal and will verify if there are any fake pattadar pass books and also if all loanees have farm land. After this verification any false claims will be deleted. Then the farmer family who have availed loans from more than one bank branch will be identified by the JLMBC members. Their details will be recorded by the JLMBC in Annexure- D. The Co-op. Dept. auditors under the supervision of District Co-op. Audit Officer shall cross verify the A, B, C with D list pertaining to PACs and DCCBs. The DCAO shall allot the auditors to Mandals under his jurisdiction under intimation to the District Collector. A senior officer not below the rank of Deputy Collector and nominated by the District Collector will be the observer for this meeting. The Annexure-D thus prepared in JLMBC will be shared by all bank branches at the mandal level.

v) After comparing and deleting farmer family who have taken loan in more than one bank branch (Comparing Annexure C and D) each bank will prepare Annexure-E. It is to be noted that if a farmer family has multiple accounts but overall outstanding for crop loan is less than Rs.1.00 lakh, then their name will not be deleted. In case outstanding crop loan is more than Rs.1.00 lakh, then the name will be retained in the bank where the farmer family first availed the crop loan or where the outstanding amount is higher, the latter being the first priority. Annexure-E will be the final list of farmers bank branch wise who will be eligible for loan waiver.

vi) Annexure-E will be exhibited village wise and social audit conducted by a team consisting of MPDO, Tahsildar, AR (SDLCO)/Sl.& Branch Manager or his representative. After conduct of social audit and finalization of all objections received the final list of farmers bank branch wise will be prepared in Annexure-E (final). After the social audit and after taking into account the objections of villages, if any, a final village-wise list of eligible farmers along with the amount eligible for waiver shall be prepared Annexure ‘E’ and displayed at all bank branches after due authentication. The final list shall be sent to the LDM and the District Collector in Annexure-E.

vii) A District Level Bankers’ meeting will be convened (DCC) by the LDM and district details of loan waiver bank wise, farmer wise will be recorded and sent to SLBC in Annexure-E. SLBC will intimate Bank wise, Branch wise farmers eligible amounts to be released to the Government in Annexure-E.

b) Claim reimbursement by the Government to the lending institutions
i) The final list shall be consolidated village-wise and district- wise by convening a meeting of the District Level Bankers’ Committee. After consolidating all such lists from the districts, the banks would need to raise a claim with the Government, which would be reimbursed to the banks.

ii) After adjustment of loan waiver amount by the State Government, each branch shall certify the amount of outstanding crop loans waived after duly crediting the amounts in the crop loan accounts of farmers. Before crediting the amount, an undertaking should be taken from the farmer in that he shall repay the amount of waiver if it is found subsequently that he/she has fraudulently obtained the crop loan or is found not eligible for crop loan waiver under the Scheme. A certificate of loan waiver in Annexure ‘F’ shall also be issued by the bank branch to each farmer, whose outstanding loan has been waived. The amount of loan waiver shall be consolidated bank-wise for the entire State.

iii) A meeting of the JMLBC shall be convened within one month of the completion of procedures laid down in i) and ii) above.

Audit

After the completion of procedures in i) and ii) above, the auditors of the Cooperation Department shall take up the audit of Primary Agricultural Cooperative Societies to ensure accuracy of the waiver amounts and shall submit the audit report to the Chief Auditor. The books of accounts of every lending institution that has granted crop loan waiver shall be subject to an audit in accordance with the usual procedure prescribed by RBI / NABARD. The audit may be conducted by concurrent auditors, statutory auditors or special auditors.
Obligations of lending institutions

Every lending institution shall be responsible for the correctness and integrity of the list of farmers eligible under the scheme and the particulars of crop loan waiver in respect of each farmer. Every document maintained, every list prepared and ever certificate issued by a lending institution for the purpose of the scheme shall bear the signature of an authorised officer of the lending institution.

Monitoring and Grievance Redressal

There will also be a suitable monitoring and grievance redressal mechanism established at Mandal, District and State levels and every representation has to be disposed off within 30 days. Detailed orders in this regard would be issued separately.

Fresh Lending and agriculture campaign

Since the eligibility for loan waiver is decided based on the outstanding crop loan as on March 31, 2014, along with the interest on it computed up to the date of implementation to be notified by the State Government, and the liability will be taken over by the State Government. All the bankers should commence fresh lending of crop loans immediately. For clarity, it is reiterated that the eligible loan amount as computed by following the prescribed procedure shall be reimbursed irrespective of its renewal subsequent to 31-03-2014.

(BY ORDER AND IN THE NAME OF THE GOVERNOR OF TELANGANA)

POONAM MALAKONDAIAH,
APC & PRINCIPAL SECRETARY TO GOVERNMENT.

To
The Commissioner & Director of Agriculture,
Government of Telangana, Hyderabad.
Copy to:
The Principal Secretary to Chief Minister.
The P.S. to Hon’ble Minister (Agri & A.H.)
The P.S. to Chief Secretary.
The Finance (EAC) Department.
The Accountant General, Telangana, Hyderabad.
The Pay and Accounts Officer, Telangana, Hyderabad.
SF/SCs.