The dust has barely settled on choppergate and another scam has come to haunt the Congress-led United ProgressiveAlliance (UPA) Government. This time it is the largest loan waiver of 2008 meant for farmers reeling under debt. TheComptroller and Auditor General (CAG) has picked holes and pointed to serious lapses in the over Rs. 71k-crore farm loan waiver scheme….
A report of the Comptroller and Auditor General (CAG) tabled in Parliament recently has found serious lapses and inconsistencies in the implementation of the over Rs. 71,500-crore farm loan waiver scheme. Severe inadequacies were found on the part of the monitoring authorities under which the Centre has so far waived loans of Rs. 52,000 crore related to approximately 3.45 crore small, marginal and other farmers, the report said.
The Agricultural Debt Waiver and Debt Relief Scheme (ADWDRS) was launched in Vidarbha by Prime Minister Manmohan Singh in May 2008. Initially, it was launched in Maharashtra, Andhra Pradesh and Kerala, where suicides by farmers peaked in 2008. It was estimated that 3.69 crore small and marginal farmers and about 0.60 crore other farmers would benefit from the scheme and become eligible for fresh loans.
A review carried out in 25 States has found that out of 90,576 cases, there were lapses in 20,216. Around Rs. 164 crore was waived in violation of guidelines, the report pointed out about the scheme touted as UPA’s 2008 game changer which helped in winning elections a year later. “In most cases, the eligible farmers were deprived of their rightful benefits while ineligible farmers were extended benefits under the scheme as the lending institutions did not prepare a correct list of beneficiaries,” the report highlighted. The scheme, meant to help indebted farmers in districts where suicides occur, was so haphazard and faulty in implementation that no records were maintained of farmers’ applications accepted or rejected by lending institutions or how many farmers were given fresh loans as a result of debt waiver/relief, it said.
According to the report, in nine States, including Chhattisgarh, Madhya Pradesh, Odisha, Rajasthan, Tripura and Kerala, at least 1,257 accounts were found to be eligible for Rs. 3.58 crore under the scheme, but were not considered by the lending institutions while preparing the list. The audit also found that in Punjab, Manipur and Rajasthan, at least 183 beneficiaries were denied benefits totalling Rs. 21.30 lakh under the scheme although their names appeared in the list of beneficiaries. According to the report, the largest number of beneficiaries, totalling 176, who were denied loans belonged to Punjab. Loans were also disbursed for the purpose other than agriculture. For example, personal loans, loans for vehicles, business, purchase of shop or land were handed out to people from the sum allotted for loan waiver, the report said.
Besides, the report said the micro finance institutions (MFIs) were given the benefit under the scheme in violation of the debt waiver guidelines. The banks claimed undue benefits like penal interest, legal charges, miscellaneous charges from the Government, although they were supposed to bear these charges themselves.
The CAG has also criticised the Department of Financial Services (DFS) in the Finance Ministry for deficient monitoring and suggested the DFS take steps to review beneficiary lists focusing on those States where indebtedness was high. “Bank officials, internal auditors and central statutory auditors, who certified the information for passing the claims, ought to be made accountable for lapses in performing their duties,” the CAG recommended. It has also suggested the DFS to take stringent action against erring officials and banks. According to the CAG, the monitoring of the scheme was “deficient.’’ There was even prima facie evidence of tampering with, overwriting and alteration of records.
In certain cases, lending institutions such as banks claimed from the Government charges such as interest in excess of the principal amount, unapplied interest, penal interest, legal charges, inspection charges and miscellaneous charges, all of which they themselves should have borne. In violation of guidelines, a private scheduled commercial bank received reimbursement for loans to the tune of Rs. 164.60 crore extended to micro finance institutions.
Besides, the Department of Financial Services (DFS) under the Ministry of Finance, which implemented the scheme, accepted the reimbursement claims of the RBI in respect of urban cooperative banks, amounting to Rs. 335.62 crore, despite the fact that even the total number of beneficiaries’ accounts was not indicated. The CAG observed that in the absence of monitoring of the scheme, lending institutions did not issue debt waiver/relief certificates to eligible beneficiaries. Nor was acknowledgement sought from farmers making them eligible for fresh loans.
The RBI and the National Bank for Agriculture and Rural Development were the nodal agencies for monitoring, but they themselves were relying on the data of lending institutions, without independently checking the veracity of claims by banks and cooperative societies. After the presentation of the draft report to the Government in January, the CAG noted that the DFS had asked the RBI and Nabard to take immediate corrective measures. The Congress defended itself with Union Finance Minister P Chidambaram saying that it was merely a banking irregularity, while the BJP demanded a CBI inquiry.
“After CWG, 2G, coalgate, choppergate, now it is farmers’ loan waiver scam. Undeserving people are getting benefit at the cost of the States exchequer,” the Bharatiya Janata Party (BJP) spokesperson Prakash Javadekar said. The BJP also demanded that deserving farmers be immediately given cash to write off their loans before March 31.
Lapses At A Glance
- Total scheme worth Rs 71,500 crore
- Loans worth Rs 52,000 crore waived
- In 9 States, 1,257 eligible farmers not considered
- Rs. 164 crore waived in violation of rules
- 183 beneficiaries denied waiver altho¬ugh enlisted for the scheme.