Fadnavis clarifies that fiscal discipline won’t be compromised despite additional burden.
Amidst the ongoing sowing operation and 11 days ahead of the launch of GST regime, the Maharashtra government on Saturday announced the crop loan waiver worth Rs 34,000 crore for 89 lakh farmers. Loans worth Rs 1.50 lakh will be completely waived. The waiver will help all debt-ridden farmers to an extent and will benefit small and marginal ones entirely.
The mid-term loan of farmers, who have rescheduled loan repayment, will also be waived.
Terming it as ‘historic and unprecedented’ one, chief minister Devendra Fadnavis, who was accompanied by his cabinet colleagues, said the loan waiver scheme is named Chhatrapati Shivaji Maharaj Krishi Sanman Yojana.
He informed that the decision, which was cleared by the state cabinet after holding discussions with various political parties and farmers organizations, will bring back 40 lakh farmers in the institutional credit line making them eligible for fresh loans. He informed that the government will tie up with banks to work out instalments for loan repayment.
The government will pay subsidy of 25% or up to Rs 25,000 to those farmers who regularly repay loan. The farmers paying income tax, all MPs, legislators, central and state government employees except class IV category won’t be entitled for the loan waiver scheme.
The cut-off date for the loan waiver scheme will be June 30, 2016 and not June 30, 2017 as demanded by various farmers’ organizations. Today’s decision also comes against the backdrop of violent agitation organized by farmers during the first week of June.
The loan waiver decision will be implemented at a time when the public debt is expected to cross Rs 4 lakh crore and it will lead to surge in fiscal deficit from the present level of 1.5% by the end of 2017-18. Fadnavis however, assured that the loan waiver will be implemented in the larger interest of the farmers without compromising fiscal discipline. He also hinted that the government will cut the expenses on various development schemes to mop up funds but the investment in agriculture will continue to rise so that farmers won’t once again enter a debt trap.
He informed that all BJP ministers and legislators will give one month salary to support the loan waiver.
He said the government will put in place monitoring mechanism to avoid scams which came into surface after the loan waiver scheme was implemented by the Centre in 2008.
Fadnavis reiterated the loan waiver scheme is the biggest one compared to other states including Telangana (Rs 15,000 crore), Andhra Pradesh (Rs 20,000 crore), Punjab (Rs 10,000 crore) and Karnataka (Rs 8,000 crore). He went on to add that the Centre had announced loan waiver worth Rs 72,000 crore but it subsequently came to Rs 52,000 crore in 2008. Subsequently, the Congress-NCP government in Maharashtra had implemented loan waiver scheme worth Rs 7,000 crore.
The chief minister said the agriculture household loan in Maharashtra is the lowest at Rs 54,000 compared to Andhra Pradesh (Rs 1,23,000), Tamil Nadu 9rs 1,15,000), Karnataka (Rs 97,200), Telangana (Rs 93,500), Harayana (Rs 79,000) and Rajasthan (Rs 70,000).
On the implementation of MS Swaminathan Commission report on remunerative prices to agriculture produce, Fadnavis said the government will seek the Centre’s intervention for its implementation.
Meanwhile, the loan waiver decision has evoked mixed reactions from the parties and farmers organizations. Former chief minister Prithviraj Chavan alleged that Fadnavis had wasted time in taking loan waiver decision as he was earlier strongly opposed to such relief. Farmers’ leaders Raghunath Patil and Ajit Nawale, who were members of the core committee, claimed the government’s decision was an eye-wash.
ANALYSIS
Maharashtra government faces tough challenge to maintain fiscal discipline despite rise in fiscal deficit and cut in capital expenditure. The government will have to explore multiple options to mobilise additional funds to spur growth. Besides, government will have to tighten the monitoring of crop loan waiver scheme to avoid scams or misuse of funds.
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