Maharashtra Chief Minister Devendra Fadnavis on Friday, 10 July announced a significant modification to the state's crop loan waiver scheme, expanding its scope to cover distressed farmers burdened with overdue loans up to the financial year 2026-27 — a first in the state's history. The revamped Punyashlok Ahilya Holkar Loan Waiver Scheme is projected to deliver a financial benefit of ₹36,585 crore to more than 56 lakh farmers across Maharashtra.

Key Changes to the Scheme

The most consequential departure from the predecessor Mahatma Phule Loan Waiver Scheme is the removal of a rigid eligibility cap. Under the earlier framework, farmers with outstanding balances exceeding ₹2 lakh were entirely disqualified — even if they owed a single rupee above the threshold. The modified scheme now allows these farmers to receive relief, provided they settle the excess amount themselves, ensuring they remain within the formal banking system.

The cutoff for eligible defaults has also been pushed forward. Originally covering overdue crop loans up to FY 2025-26, the scheme now encompasses defaults through FY 2026-27 — a move the state government describes as unprecedented. Additionally, following pressure from MahaYuti alliance legislators, the ₹50,000 cap applicable to certain farmer categories has been raised to ₹2 lakh, bringing an estimated additional two lakh farmers under the scheme's coverage. This expansion adds a fiscal burden of ₹4,000 to ₹5,000 crore to the state exchequer.

What the Government Said

Chief Minister Fadnavis, responding to a debate on a motion in the State Assembly, dismissed Opposition claims that the scheme would benefit only 12,000 to 13,000 farmers while leaving out 36 lakh others, calling those figures 'completely baseless.' He maintained that the decision was driven by agrarian distress and not electoral calculations.

'We could have waited until 2029 since there are no immediate elections, but we decided to act because our farmers are in deep trouble,' Fadnavis said. He added: 'A loan waiver is a necessity of the hour. While no loan waiver has ever made a farmer rich, its true objective is to empower them to borrow from formal institutions again, ensuring they never have to knock on a private moneylender's door. We must rescue the farmer, but we must also keep the banking system alive.'

Broader Agricultural Support

The loan waiver comes on top of the state government's existing agricultural support architecture, which includes ₹25,000 crore annually in electricity waivers and a total budgetary outlay of ₹95,000 crore across various agricultural departments and subsidies. The comprehensive package also includes a one-time settlement (OTS) option and incentive bonuses for farmers who regularly clear their dues.

Credit Discipline and Banking Health Concerns

Maharashtra has now implemented farm loan waivers in 2017, 2020, and 2026 — a frequency that critics argue risks undermining the health of co-operative banks. The state government cited the example of Nagpur, where a past banking scam has severely constrained fresh crop loan disbursements to local farmers, as a cautionary precedent.

To safeguard credit discipline, the scheme retains exclusion criteria for farmers who benefited from consecutive waivers in close succession — mirroring the exclusion models applied between the 2008 national waiver and the 2009 state waiver, and between 2017 and 2019. The government said this is intended to maintain banking liquidity and prevent systemic moral hazard.

What Comes Next

With the scheme now formally modified and its financial contours defined, implementation details and disbursement timelines are expected to be notified. The scale of the intervention — covering over half a crore farmers — will test the state's administrative machinery and the resilience of Maharashtra's co-operative banking network in the months ahead.