Explainer: War of words between CM Jagan and Naidu over zero interest farm loans

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Explainer: War of words between CM Jagan and Naidu over zero interest farm loans

The YSRCP and TDP row over interest-free farm loans continued into the second day of the Andhra Pradesh Assembly Budget session on Friday. CM Jagan and former CM Naidu have been in a heated argument over the implementation of farm loan waivers and interest subsidies during Naidu’s term. What is the controversy about? Here is an explainer:

While discussing the state of drought and agriculture in the state, Jagan announced a scheme called ‘YSR Sunna Vaddi Scheme’ (YSR Zero Interest Scheme) for farmers in the Assembly on Thursday. The argument began when TDP MLA Rama Naidu called it an old scheme implemented by the Congress government in 2013 and continued by the TDP government since then. 

Jagan rubbished the claim, challenging Naidu to resign if he proved that the TDP government during its term had not spent a single rupee on zero-interest farm loans. “From 2014 to 2019, how much money have you given farmers under zero interest? If I bring proof with records will he resign and go home?” said Jagan, referring to Naidu.

“They haven't given a rupee for interest free loans, now they’re bulldozing this scheme saying it is already existing. We are bringing a new scheme which is good for farmers, they should be happy and congratulate,” said Jagan. 

Citing numbers for the Financial Year 2018-19, Jagan said that Rs 76,721 crore was given in crop loans. “To make it zero interest, the government would have to spend 4% of the amount as interest subsidies to farmers. That would be Rs 3,068 crore. But every year the same amount of Rs 172 crore in allocated in the budget, and the actual expenditure ends up being zero. Farmers are having to pay Rs 3,068 crore on their own. The year before, it was Rs 2,600 crore. Considering an average of Rs 3,000 crore, the TDP government should have spent around Rs 15,000 crore on interest subsidies,” said Jagan, adding that the Naidu government had cancelled the scheme and replaced it with farm loan waivers, which were also not implemented properly.  

Referring to a document from an SLBC  (State Level Bankers’ Committee) meeting dated March 31, 2014, Jagan questioned why farm loan waivers since 2014 amounted to only about Rs 15,000 crore, while the amount that farmers owe banks was Rs 87,612 crore. The YSRCP also claimed that the Centre’s fund had not been reaching farmers, and seed shortage and rescheduling of loans during drought were neglected by the TDP government. 

After the Assembly adjourned, Naidu quickly called a press conference, where he shared data regarding the implementation of ‘Vaddi Leni Runalu’ (interest-free loans) and ‘Pavala Vaddi’ (interest subsidies) schemes during his terms. 

TDP’s data claims

Claiming that the House had adjourned and the CM had ran away by the time he could gather data to contradict Jagan’s claims, Naidu shared details from a few documents with the media on Thursday. 

Naidu cited a GO (no. 639) dated April 27, 2013, issued by the then Chief Minister of erstwhile AP Kiran Kumar Reddy, which introduced the schemes Vaddi Leni Runalui (interest-free loans upto Rs 1 lakh) and Pavala Vaddi (interest subsidies for loans from Rs 1 lakh to Rs 3 lakhs), subject to repayment in due time. “They have not invented it, it’s an ongoing scheme,” Naidu said. 

He then went on to read the minutes of an SLBC meeting from March 2016, which had details of implementation of the two schemes from the Financial Year 2013-14 upto 2015-16.  According to Naidu’s statement, under the Pavala Vaddi scheme, Rs 8 crore 45 lakh were released in FY 2013-14 benefiting nearly 1,64,500 farmers, Rs 1 crore 2 lakh was released in FY 2014-15 benefiting about 7,500 farmers, and Rs 62 lakh were released for FY 2015-16, benefiting around 9,200 farmers, amounting to a total of Rs 10 crore 9 lakh spent between 2013 and 2016 under the Pavala Vaddi scheme. 

Under Vaddi Leni Runalu (VLR) scheme, Naidu said that his government had released Rs 394.29 crore in FY 2013-14 (including interest claims for backlogs from the previous Congress term), Rs 49 crore 31 lakh in FY 2014-15, and Rs 27 crore 28 lakh in FY 2015-16. 

“Under VLR, interest amount payable is 4% only. Under Pavala Vaddi, interest subsidy payable is only 1%. The SLBC letter says that the budget provision of Rs 177 crore is adequate, since there is a balance of Rs 257 crore with the department. The bankers have said that we have paid for three years,” Naidu said. 

Naidu added that all in all, during his term, the TDP government had spent Rs 25.14 crore on Pavala Vaddi and Rs  979.45 crore on Vaddi Leni Runalu. He said that Rs 507 crore was the pending payment for 2017-18, and the claims for 2018-19 were yet to be received. 

Naidu also pointed to a letter from Muralidhar Reddy, Special Commissioner of Agriculture in May 2018 informing the SLBC that Vaddi Leni Runalu would be continued for the year 2018-19.

Naidu reiterated these arguments in the Assembly on Friday, additionally referring to the AP Socio-economic surveys of the past 3 years. Naidu said that according to socio-economic survey 2015-16, during 2014-15, Rs 44.31 crore was settled under VLR, and Rs 1.02 crore settles under Pavala Vaddi. In 2015-16, Rs 156.80 crore was released under VLR, against the allocation of Rs 172 cr allocation. For Pavala Vaddi,  Rs 9.50 crore was released against an allocation of Rs 10 cr. According to socio-economic survey 2016-17, during 2015-16, Rs 31.10 crore was settled for VLR, and Rs 0.87 crore for Pavala Vaddi. According to socio-economic survey 2017-18, during 2016-17, Rs 9.47 crore was settled for VLR and Rs 5.43 crore for Pavala Vaddi, Naidu said. 

Naidu also said that the TDP was planning to move a privilege motion against Jagan for lying on the floor of the Assembly. He demanded that Jagan must either quit or apologise to the people of the state, for lying on the floor of the House.

Jagan’s response 

In response, Jagan said that no funds were released under VLR to Self Help Groups in the rural sector since August 2016, and in the urban sector since April 2016. Interest subsidies of Rs 2,303 crore were pending in the rural sector, and Rs 732 crore in the urban sector, said Jagan, saying the SHG members were being made to bear the burden of interest. “The government still owes Rs 3,036 crore to Self Help Groups. Nearly Rs 11,000 crore were to be spent on interest subsidies, but none of these funds were released.” Jagan questioned how Naidu could claim that interest-free loan schemes had been running in such circumstances. 

Jagan referred to crop loan data from the past 5 years to point out backlogs in releasing subsidies. According to the data shared by the Chief Minister, in 2014-15, the total amount of crop loans disbursed was Rs 29,658 crore, for which the 4 % subsidy under VLR would amount to Rs 1,186 crore, of which the state government spent only Rs 44.31 crore. In 2015-16, the loan amount totalled Rs 57,085, for which request for interest subsidies of Rs 2,283 crore were submitted to the government, but only Rs 31 crore were released. In 2016-17, the total loan amount was Rs 58,840 crore, subsidies requested were Rs 2,354 crore, and amount released was Rs 249 crore. In 2017-18, total loan amount was Rs 67,568 crore, subsidies requested Rs 2,703 crore and amount released was Rs 182 crore. In 2018-19 , loan amount was Rs 76,721 crore, subsidies required Rs 3,069 crore and amount released Rs 122 crore.  

“In 5 years, the government should have spent Rs 11,595 crore giving interest subsidies to banks, but they have only given around Rs 630 crore. That’s only around 5 per cent. Basically we said ‘You haven’t spent 1 rupee of the Rs 1 lakh you were supposed to. They are saying ‘No, we spent 2 rupees so assume it’s the same as spending Rs 1 lakh’”, said Jagan, calling it a shameless response. 

When the TDP leaders raised their hands to respond, Jagan said, “They’re shamelessly raising their hand again, we must cut it off. They’re the ones who started this whole thing (Rama Naidu and Chandrababu Naidu). We have responded twice already, but the dog’s tail will remain curved.”

Naidu has also taken objection to the language used in the Assembly. Speaking about irrigation, Jagan said, “Was Chandrababu Naidu grazing donkeys when the neighbouring Telangana government was constructing Kaleshwaram project which is unfavourable for Andhra Pradesh?”

Naidu complained that he was being addressed without respect, in the singular second person. “Do we look like donkey grazers to you?” he asked, taking offense.