The Yogi Adityanath cabinet’s decision to waive loans of small and marginal farmers will further strain the government exchequer.
As per estimates, the loan waiver, coupled with the one-time settlement scheme to write off NPAs, would put a financial burden of Rs 36,359 crore on the state’s purses.
The Uttar Pradesh government will float Kisan Rahat Bonds to borrow additional funds for farm loan waiver. It will also request the Centre to exempt loan waiver amount from the provisions of the Fiscal Responsibilities and Budget Management (FRBM) Act to keep the fiscal deficit within permissible limits.
A senior state government official said under the provisions of FRBM Act, the state’s fiscal deficit should remain less than 3% of SGDP. But in 2016-17, this had reached 4%.
In view of the implementation of UDAY scheme for restructuring of power companies, the state government had floated bonds of Rs 31,876.13 crore in 2015-16 and Rs 13,303 crore in 2016-17. As the Centre decided to keep this amount out of the provisions of the FRBM Act, the state’s fiscal deficit was pegged at 2.97% of SGDP.
As the state would have to bear the burden of implementing the seventh pay commission recommendations in 2017-18, it would continue to face challenges on the financial front.
The state government proposes to pay arrears to the employees in two financial years, 2017-18 and 2018-19, which would entail an additional expenditure of about Rs 30,000 crore (Rs 18,000 crore on increased salaries and pension and Rs 10,000 crore on clearing arrears) in 2017-18.
Uttar Pradesh’s total debts stood at Rs 2,09,227.32 crore on March 31, 2012. The SP government took over on March 15 that year.
As per estimates, the total debt is expected to reach Rs 3,75,049.45 crore as on March 31, 2017, and would rise further after the loan waiver.