MUMBAI, June 3 (Reuters) - Indian farmers in the western state of Maharashtra held back farm produce in the province for a third day on Saturday, despite the state's assurance that it would waive loans held by defaulting farmers with small tracts of land and low incomes.
Maharashtra farmers want Chief Minister Devendra Fadnavis' government to take steps to boost farm incomes and output including waiving all agricultural loans, similar to the $5.6 billion in debt forgiveness announced in April by India's most populous Uttar Pradesh state.
Prices of vegetables and milk have jumped more than 50 percent in major cities such as Mumbai and the information and technology hub of Pune after farmers cut supplies from Thursday.
Maharashtra, India's second most populous state, is the country's second-biggest producer of sugar, cotton and soybean.
A small fraction of farmers union called off the strike Saturday following a four-hour long meeting with Fadnavis.
The government would waive the debt of marginal farmers who defaulted in the last few years, Fadnavis said, adding a panel would be set up to find ways to implement the waiver.
Maharashtra needs to spend 305 billion rupees ($4.7 billion) to write off debt owed by about 3.2 million farmers who had defaulted on bank loans, he said on Thursday.
But a larger faction of farmers said they would continue the strike until the government waived debt of all Maharashtra farmers and not just marginal, or poorer, farmers who defaulted.
"The strike is not over. We will continue the strike until government announces debt waiver for all farmers," said Ajit Nawale, who walked out from the meeting.
Such outbursts of rural discontent in Maharashtra and other states pose a challenge to Prime Minister Narendra Modi, who has promised to double farm incomes over the next five years.
Two-thirds of India's 1.3 billion people depend directly or indirectly on farming for their livelihood but farm incomes only account for 14 percent of gross domestic product, reflecting a growing divide between the countryside and wealthier cities. (Reporting by Rajendra Jadhav; Editing by Sankalp Phartiyal, Sanjeev Miglani and Edmund Blair)