States to foot farm loan waiver: Jaitley

New Delhi/Mumbai : Finance Minister Arun Jaitley today said the Union Government will not partake in any state’s fiscal leverage in waiving farm loans and made it clear the cost has to be borne by them. The stance of the Central Government assumes significance against the backdrop of the farm debt waiver announced by the Maharashtra Government yesterday even as the country has already witnessed violent protests from farmers in Madhya Pradesh a few days ago, demanding a debt relief.Uttar Pradesh was the first state this year to announce a Rs 36,359-crore farm debt waiver for small and marginal farmers.
On yesterday’s announcement by Maharashtra to do away with farmers’ loans, Jaitley made it clear there would be no funding from the Central coffers.
“I have already made the position clear that states which want to go in for such schemes (farm loan waivers) will have to generate them from their own resources. Beyond that the Central Government has nothing more to say,” Jaitley responded.
Despite a bumper crop this rabi season, farmers in many states are in distress because of a sharp fall in prices in both the domestic and global markets, which has sparked agitations in the country. Reserve Bank Governor Urjit Patel has already warned of the fiscal situation going out of hand if states keep doling out in such a manner, which may also stoke inflationary expectations. “The risk of fiscal slippages, which by and large can entail inflationary spillovers, has risen with the announcements of large farm loan waivers,” the RBI said in its second bi-monthly monetary policy review for 2017-18 announced last week. Meanwhile, the Maharashtra Government today said it was looking to exclude rich farmers from availing the benefits of the proposed scheme. “The rich farmers mainly benefited from the loan waiver scheme introduced in the past. To avoid such a possibility, the government will set up a committee to examine ways to prevent rich farmers from benefiting from the loan waiver,” said Revenue Minister Chandrakant Patil.