Reserve Bank of India has written to Andhra Pradesh and Telangana governments who have promised a waive on the farm loans asking both the governments to clear the loans of farmers at a stretch. RBI gave more clarification on this issue and said it has no objection if the entire debts are cleared in currency. But RBI said it is against bonds and installments which could eventually make it difficult for banks to grant loans to farmers again.

Only Telangana and Andhra Pradesh leaders have announced a waive on farm loans in the entire country during the elections. Now Andhra Pradesh government has to clear Rs 87,000 crores of farm loans whereas Telangana government has to clear Rs 42,000 crores. While Telangana government has kept certain conditions, AP government has appointed a Kotaiah committee to sketch the strategies on how to waive the farm loans.

With RBI sending clear instructions to the governments, it is not any easy task to clear the loans in currency form. Andhra Pradesh government is in deficit budget and this is a serious concern for it. The Package and Special category status are yet to be granted to Andhra Pradesh state which have some favorable consequences.

(AW: Vamshi)