Rajasthan farmers unlikely to see loan waivers till after polls

The Ashok Gehlot government may have scored brownie points for delivering its promise of waiving loans of farmers just two days after assuming charge in Rajasthan, but there is no timeline yet on the distribution of waiver certificates that will lead to concrete benefits for farmers.

The scheme, which was announced two days back by Chief Minister Ashok Gehlot, is expected to result in an additional burden of Rs 18,000 crore on the state exchequer. Gehlot claimed that the previous government's farm waiver announcement, which hadn't been executed fully, would also add to the weight.

"Our government also has to bear a major part of the fiscal burden of the scheme announced by the previous BJP government, amounting to Rs 6,000 crore, taking the total loan burden to Rs 24,000 crore," he said.

These loans are drawn on two different sets of banks. While around Rs 10.5-crore borrowings of 27 lakh farmers are from cooperative banks, around 24 lakh farmers have defaulted on repayment of money borrowed from nationalised banks, officials in the government said.

The officials involved in the execution of a similar waiver announced by the previous Vasundhara Raje regime said implementation would take time. "When the last government declared a waiver of Rs 8,000 crore for small and marginal farmers in February, it took about a quarter of this fiscal to conceive and start issuing the first batch of waiver certificates," an official said. The first set of certificates could be distributed only in June when the scheme was incorporated in the state budget tabled in the Assembly in February this year.

This time it's thrice the amount promised earlier, and therefore, loan waiver certificates cannot be issued in the coming days, unless the government convinces the banks to make funds available in the coming months to ensure benefits percolate to the last farmer before the general elections due in May. "The model code of conduct for the election is expected to come into force in March. It is very difficult to clear the dues of 50 lakh farmers by then," the official added.

Asked how long it would take for handing over the certificates to farmers, a senior official overseeing the scheme's implementation told DNA, "The certificates shall be given. Wait and be patient."

Sources said the finance department is still mulling over the course of action to be taken for wiping the slate clean for indebted farmers. Sources said the government has two options. The first is to bank on the tried and tested government guarantee to the banks.

"Last time the National Cooperative Development Corporation (NCDC) had agreed to give a loan of Rs 5,000 crore after the state government gave a guarantee to Rajasthan State Cooperative Bank for writing off farmer debts during Raje government," said an official in the know. Sources said that this time, too, the government may choose to give a guarantee for getting funds from financial institutions.

The other option is to include it in the state budget, but that will take a toll on the state's fiscal health and increase fiscal deficit. "If the government includes this loan waiver in its budget, it shall have to squeeze the juice out of existing schemes or delay some projects and divert money from them into the loan waiver scheme to settle it on priority," a senior official said. "It is doable but not without hassles."

However, given the waiver amount of Rs 24,000 crore, which when compared to the state budget for current fiscal for which revenues have been estimated at Rs 2,12,325 crore, the size of the burden is a whopping 11 per cent of the total outlay. This will expand the state's fiscal deficit, which already stands at Rs 28,011 crore for 2018-19 so far, much higher than the budgetary estimate of Rs 24,753 crore in 2017-18.