India launches farm relief scheme

By Prachi Pinglay
BBC News, Mumbai

Many Indian farmers have been hit hard by debt

Banks in India have published lists of farmers who are eligible for an ambitious government scheme to write off loans they cannot pay back.

The $1.8bn debt relief scheme was announced in February and covers nearly 30 million farmers across the country.

It is being seen by some as a last-ditch effort to head off an agricultural crisis in India.

Some 10,000 farmers are estimated to commit suicide in India every year, many because they cannot pay debts.

'Loopholes'

All government banks will display lists of farmers who are to have their loans written off.

There is a one-month period during which farmers can appeal for their names to be included in the lists.

However, without fresh loans, the scheme is being criticised by farmers, particularly in parts of Maharashtra state where suicides have been high.

Prime Minister Manmohan Singh announced a relief package for farmers following a spate of suicides in 2006-2007.

The debt relief scheme applies to small farmers with less than two hectares of land who took out loans between 1997 and 2007.

In Vidarbha - an arid, largely cotton-producing region in Maharashtra - many farmers have more than two hectares and will not be eligible.

Critics of the scheme say it has loopholes and is of no use if the banks do not issue fresh loans to buy seeds and fertilisers.

More importantly, banks have expressed reservations about being able to issue fresh farm loans - and have urged the federal government to disburse money from the scheme as soon as possible so that fresh loans can be issued.

The sowing season has already started and if farmers do not get loans immediately they say they will be forced to turn to private money lenders.

In all India's federal and state governments have pledged a little more than $1bn in aid for farmers.

But according to one government report, the relief package announced in 2006 did not result in a decrease in suicides in the six worst hit districts of Maharashtra state.