A P Launches Fec For Farm Debt Redemption

[Gajji_maraja]

The Andhra Pradesh government formally launched the Farmers’ Empowerment Corporation (FEC) to provide agricultural debt redemption to farmers and act as an umbrella organisation their development.

FEC, also known as the Rythu Saadhikara Samstha, is registered as an owned enterprise of the government of Andhra Pradesh. It has been set up with a paid up capital of Rs 1 crore. A government order to this effect was also issued on October 18.

Currently, farmers’ welfare and development activities are monitored by multiple entities, including corporations and societies. The newly formed body will work for their integration.

The Andhra Pradesh Government on Monday had released Rs 5,000 crore towards agricultural debt redemption. All eligible farmers who availed crop loans up to Rs 1.5 lakh would be covered under the debt redemption scheme.

AP chief minister N Chandrababu Naidu said the government would initially pay 20 per cent of the entire loan outstanding to banks on behalf of the farmers. The remaining would be repaid in four installments. The government was working out details, including the amount to be repaid to banks upfront. The government was waiting for some data from the banks to weed out the cases that do not meet the eligibility criteria. The initial estimates said the waiver of all farm loans taken this year was expected to cost over Rs 40,000 crore to the exchequer.

The FEC would also play a key role in implementation of the Primary Sector Mission, formally launched in Anantapuram on October 6, which would work to ensure that the agriculture segment too received a boost in the state.

Earlier, the government had indicated that the financial health of farmers as well as the state was precarious. The state was not in a position to repay banks for the loan waiver in one go and paying in installments was the way to protect farmers’ interests. The state cabinet cleared the FEC earlier this month to revive the ailing agriculture sector. FEC would strive to make agriculture profitable by empowering farmers, apart from helping in making the farmers debt-free.

The lenders earlier this month have asked the government to consider setting up a second debt recovery tribunal (DRT), as it would reduce the high pendency of cases and recovery in high volume loans could be hastened. They pointed out that there was a slowdown in resource mobilisation and credit expansion due to non-recycling of funds owing to poor repayment by borrowers.

[Gajji_maraja]

:4_12_13: