India Government today announced a whopping Rs 60,000-crore package to provide relief to the indebted farming community by waiving loans of small and marginal farmers.

Presenting the Budget 2008-09, Finance Minister P Chidambaram announced a scheme of debt waiver and debt relief for farmers, entitling them to get fresh loans from the banks.

About three crore small and marginal farmers are likely to be benefited from the debt waiver, while another one crore peasants are estimated to get relief under the scheme.

The government proposes to waive all farm loans disbursed by banks and cooperatives up to March 31, 2007 to small and marginal farmers. The total value of overdue loan being waived is estimated at Rs 50,000 crore and is likely to benefit three crore small and marginal farmers.

Marginal farmers is defined under the scheme as those holding up to one hectare of land, while small farmers are those who have 1-2 hectare under their posession.

The government also announced a one time settlement (OTS) scheme for other farmers, under which they would get a rebate of 25 per cent, if they pay the balance 75 per cent of their outstanding loan. The OTS relief on the overdue loans is expected to cost the exchequer Rs 10,000 crore.

"All agricultural loans disbursed by the scheduled commercial banks, regional rural banks and cooperative credit institutions up to March 31, 2007 and overdue as on December 31, 2007 will be covered under the scheme," Chidambaram said. The implementation of the debt waiver and debt relief scheme will be completed by June 30, 2008, he said.

The agricultural loans, which have been restructured and rescheduled by banks in 2004 and 2006 and also in normal course, would be eligible under the waiver and OTS scheme.