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Maharashtra announces loan waiver for farmers, but conditions apply

The farmers had gone on strike on June 1. Photograph: (Others)

WION Mumbai, Maharashtra, India Jun 11, 2017, 12.42 PM (IST)

The Maharashtra Government on Sunday announced loan waiver for farmers, who in turn ended an eleven-day strike that had curtailed supplies of vegetables and milk to cities and spiked prices.

Media reports quoted Maharashtra Revenue Minister Chandrakant Patil as saying that loans of small farmers have been waived with immediate effect. He added that in principle approval for loan waiver had been given to all farmers with some conditions.

Chandrakant Patil told reporters that a joint committee of government representatives and farmer leaders will be formed to decide on the exact details and execution of the waivers.

The loan waiver plan was chalked out by Maharashtra Chief Minister Devendra Fadnavis last week, who had said the government was willing to write off up to 305 billion rupees ($4.75 billion) in defaulted loans held by farmers. 

That offer had been rejected by farmers, who had demanded a waiver of all loans, similar to the $5.6 billion in debt forgiveness announced by Uttar Pradesh in April.

The government reportedly came to an agreement with farmers today (June 11) after a four-hour long meeting in which the farmers put forward their list of demands.

Maharashtra accounted for the highest number of farmer suicides in the country last year, followed by Karnataka and Madhya Pradesh - currently the epicenter of a farmers agitation.

Bankruptcy and indebtedness are considered the primary reasons for the high suicide rate in the state.

Farmers in Maharashtra, who have been reeling under a drought since the last few years, went on their first ever strike on June 1.

Their agitation saw violence and angry farmers spilling milk and throwing vegetables on the road. At one point the strike expanded into a bandh call, with agitators threatening to stop supply to urban markets.

The loan waiver for farmers in Uttar Pradesh announced by the government has also contributed to the unrest in Maharashtra and Madhya Pradesh.

Reserve Bank of India Governor Urjit Patel has sharply criticised farm loan waivers, saying they increase government spending and widen fiscal deficits, while creating moral hazard by eroding the country's credit culture.

(WION with inputs from Reuters)

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