Farm loan waiver: Punjab looks to Centre, steps up bid to relax norms

With farmers upping the ante against the Punjab government for not fulfilling its promise of extending farm debt waiver and holding dharnas, the state government has listed the notification for the waiver in the agenda for Wednesday’s Cabinet meeting even as the state has no means to pay the Rs 10,000-crore waiver as of now.

THE GURDASPUR Lok Sabha by-election has come as a ray of hope for the cash-strapped Punjab government, desperately trying to borrow Rs 10,000 crore to extend farm debt waiver to farmers. The government hopes that with the bypoll in mind, the NDA government at the Centre will relax norms to help the state borrow money. With farmers upping the ante against the Punjab government for not fulfilling its promise of extending farm debt waiver and holding dharnas, the state government has listed the notification for the waiver in the agenda for Wednesday’s Cabinet meeting even as the state has no means to pay the Rs 10,000-crore waiver as of now. With just two days left for the Cabinet meet and unrest among farmers organisations growing, state Finance Minister Manpreet Singh Badal met Union Finance Minister Arun Jaitley in Delhi on Monday and pushed for easing the fiscal responsibility and budget management (FRBM) limit.

Sources said the government had made out a case especially in the run-up to the Gurdaspur by-election thinking the NDA government would also like to take credit for allowing the state to pass on the benefit of waiver by relaxing norms. Despite the state awaiting the Centre’s nod to relax the borrowing limit under the FRBM Act norms for a month-and-a-half now and having no access to the huge amount, it has still listed the item on the agenda. If given clearance, the waiver would be notified. “We will not waste time to notify it,” said a government functionary. The relaxation would help the state borrow Rs 10,000 crore promised as loan waiver. If the Centre does not relax the limit, the state would not be able to borrow the money. It is learnt that Jaitley heard out Manpreet and assured him that the Centre would take it up.

A senior government functionary said though the code of conduct was in place in Gurdaspur only as the bypoll was scheduled for October 11, there was no reason that the Election Commission would prevent the state from notifying the debt waiver considering that farmers were committing suicide. “The only ray of hope for these farmers seemed to be the waiver. Moreover, the waiver has been announced already,” said the functionary.

The state needs relaxation in borrowing limit as its expected gap in revenues and expenditure in financial year 2017-18 had been projected at Rs 10,273 crore. Accoridng to the FRBM Act, 2003, the state government’s borrowings are restricted to a maximum of 3 per cent of the GSDP, which comes to Rs 12,810 crore. The government can only borrow Rs 2,000 crore more after filling its gap. Hence, it requires relaxation.

It is not for the first time that the state has knocked at the doors of the Centre. Earlier, Chief Minister Captain Amarinder Singh met Prime Minister Narendra Modi on the issue in the first week of August. The state was expecting the issue to be taken up at the subsequent Union Cabinet meeting. But it was not even discussed. The state learnt from functionaries at the Centre that the issue was being deliberated upon as many states were facing the menace of farmer suicides. If Punjab was given relaxation for extending farm debt waiver, many other states would also follow suit.

The state needs Rs 3,600 crore to pay off the loaned amount of cooperative banks, besides the first instalment of the Rs 6,000 crore loan waiver pertaining to national and commercial banks. The agenda was already listed for the September 4 Cabinet meeting. But the meeting was delayed as Amarinder was preoccupied.