Farmers seen sowing seeds of maize in a land on the outskirts of Shikaripura town in Shivamogga | Shimoga Nandan
BENGALURU: While economists have been saying that the ambitious farm loan waiver is unviable, Chief Minister H D Kumaraswamy is confident of implementing a waiver that doesn't drown the state's economy. By his own estimates, waiver of crop loans alone will cost more than `30,000 crores.
The coordination committee of the coalition government, which is headed by former CM Siddaramaiah, on Sunday, approved the proposal for a farm loan waiver. Despite the burden it will have on the exchequer, the government intends to adopt a few measures to ensure funds are raised for the scheme. "Additional debts will be raised but none of it will be diverted to waive loans," said a source who is on the Chief Minister's advisory board, while laying out a few measures that the government intends to take.
Chief Minister H D Kumaraswamy is expected to spell out the details of loan waiver, timeline, size of loans to be considered and eligibility criteria for the waiver while presenting the budget on Thursday. All crop loans taken till July 1, 2017, are likely to be considered for the waiver despite a demand for loans up to May 2018 to be considered.
"Not all crop loans will be waived, but those that meet the stipulations will be," said a source in the Chief Minister's Office, essentially indicating that the waiver will not be a blanket implementation. "Unspent funds from various departments that get carried over to next year will be tapped. Funds will be cut from expensive but non-populist schemes. Resource leakage through inter-departmental/inter-ministerial schemes is also something that the government has its eyes on to raise funds," a source close to Deputy Chief Minister Dr G Parameshwara said.
"The government will take fresh loans, but that will be invested in infrastructure and development projects and not into funding the waiver. Funds for waiver will only come from the revenue that the government already has," said a source in the CMO. All of this, sources in the government claim, will be done within the regulations of the Fiscal Responsibility Act.
In February, when then chief minister Siddaramaiah presented the vote on account, fiscal deficit was expected to be `35,127 crore, which is 2.49% of GSDP, and total liabilities were pegged at `2,86,790 crore, an estimated 20.36% of GSDP which is within the limit of 25% mandated under the Karnataka Fiscal Responsibility Act. But with the loan waiver, the burden is expected to naturally expand. "It is impossible to accommodate a waiver of this size in a single budget. We will divide it into consecutive budgets," said an official in the CMO.
