Indian Farmers' Loan Waiver Scheme Hits Fraud Hurdle

By Anjana Kumar | INN Live

A scheme introduced five years ago to benefit impoverished farmers pushed to the brink of starvation is coming back to haunt the UPA government as details of a massive fraud emerge.

The farmer’s loan waiver scheme, once touted a trump card for the UPA government, has become a source of embarrassment, mere months before the general elections. The government has admitted massive fraud, irregularities and tampering of data by officials in the `65,000-crore welfare project.
The government recently told the Public Accounts Committee (PAC) that action will be taken against those found guilty of pushing tampered and ineligible farmers’ lists and so far it has initiated 3,679 cases against erring babus responsible for irregularities to the tune of `230 crore. The PAC report, which examined the Comptroller & Auditor General’s (CAG) report on Debt Relief Scheme in January 2014, will be tabled in the coming session of Parliament.

Admitting massive irregularities before PAC, Department of Financial Services said; “Now the fact is somebody who is not eligible got it and somebody who is eligible did not get it or alternatively there was a case of tampering or alternation. This could not happen unless the bank staff concerned made a mistake and a mistake which was apparent on the face of it.”

The loan waiver scheme was initiated by the UPA government in 2008 to write off bank loans of 3.69 crore small and marginal farmers in 35 states and Union territories. Approximately 60 lakh other farmers were offered debt relief in form of waiver of 25 per cent of the eligible amount on condition that the famer would pay the remaining 75 per cent under a one- time settlement scheme.

The Department of Financial Services under Ministry of Finance had appointed Reserve Bank of India and National Bank for Agriculture and Rural Development (NABARD) as nodal agencies to monitor the implementation of the scheme in respect of the respective banks under their due control, including rural banks and cooperative societies. Of the total beneficiaries, 1.85 crore owed money to government-owned banks and 1.88 crore to lending institutions under NABARD. No money changed hands or was paid to beneficiaries. The implementing agencies simply wrote off the dues and claimed reimbursement from the government.

Responding to PAC concerns about largescale fraud, the government said in at least 301 cases, it has detected tampering of records of beneficiary farmers and five FIRs were lodged. In 449 cases, responsibilities have been fixed by the lending institutions. The probe indicated funds were also misused in writing off personal, vehicle loan, purchase of land and loan for shops in connivance with branch officials, who were supposed to help the farmers suffering from heavy debt burden. According to sources, PAC also flagged the case of over 21,000 accounts which have no acknowledgement from farmers or any other proof indicating shoddy implementation of the scheme.

“Large number of eligible farmers might have been eventually deprived of benefits of the scheme due to perfunctory approach and the scheme could not achieve the intended goals,” PAC observed, terming the scheme a failure.

Sources said an official of Department of Financial Services who recently deposed before the committee did not dispute all these irregularities. “The issues largely raised by the CAG were correct. I do not think that government has any intention of disputing the veracity of the points raised by CAG,” the official told the PAC.

In a written note to PAC, Department of Financial Services gave details of action taken by the authorities to recover funds. It said the recovery of `2.38 crore has been made in 908 cases where benefits were granted to ineligible beneficiaries. In addition, recoveries have been made amounting to `3.61 crore in 1,358 cases where excess benefits were extended to the beneficiaries. Although, the amount recovered so far is too small comparing the massive irregularities, government has assured re-verification of entire 34, 277 branches under RBI and over 9,000 under NABARD.

The panel is understood to have slammed the government’s myopic approach in conceiving and implementing a scheme involving financial concessions to the tune of more than `65,000 crore, adding that the vital lists of intended beneficiaries were prepared in a cavalier manner as these were replete with mistakes, leading to serious financial lapses.

“The PAC has asked the government to submit an action taken report, fixing the responsibilities of those responsible for irregularities by June 2014. Government further assured the PAC that it was committed to re-examine every single case and take corrective action. But, considering the very large number of beneficiaries, this is going to take some time,” a source said.