Jaipur: Two days after being sworn in, the Congress government in Rajasthan on Wednesday announced loan waiver for farmers up to ₹2 lakh each, resulting in the burden of an estimated ₹18,000 crore on the Exchequer.

The Vasundhara Raje government had waived farm loans up to ₹50,000 each obtained from the cooperative banks. The State government had provided a guarantee to the State Apex Cooperative Bank to take a loan from the National Cooperative Development Corporation for funding the scheme.

There will be no monetary ceiling on the short-term agricultural loans obtained from the cooperative banks.

Chief Minister Ashok Gehlot said after a marathon meeting in the Secretariat, where the modalities for waiver were worked out, that the agricultural loans of defaulters up to ₹2 lakh each with the nationalised, commercial and rural banks would be waived with the cut-off date of November 30. “There will be no monetary ceiling for the cooperative loans, though the cut-off date will be applicable to them [as well],” he said.

Mr. Gehlot said the previous BJP regime, which had announced waiver of farmers’ loans up to ₹50,000 each, had paid only ₹2,000 crore and left a burden of ₹6,000 crore on his government. The Congress government's decision is set to benefit over 30 lakh farmers in the State.

Congress president Rahul Gandhi had promised during his poll campaign that the farmers’ loans would be waived within 10 days of coming to power in the election-bound States. Of the three States where the Congress has won, Madhya Pradesh and Chhattisgarh have already announced the waiver of short-term loans.

“We also included this promise in our manifesto for the Rajasthan Assembly election. It was all the more needed in our State, where debt-ridden farmers were committing suicide because of the flawed policies of the previous government,” Mr. Gehlot said, emerging from the meeting that lasted several hours.

Chief Secretary D.B. Gupta and senior officers of the Finance, Agriculture and Cooperative Departments were involved in the discussions on the loan waiver scheme.

The Vasundhara Raje government had waived farm loans up to ₹50,000 each obtained from the cooperative banks. The State government had provided a guarantee to the State Apex Cooperative Bank to take a loan from the National Cooperative Development Corporation for funding the scheme.