Maharashtra farm loan waiver: Mungantiwar to meet Jaitley today for help to raise funds

Mumbai city news: The Maharashtra government, reeling under debt, wants to avoid paying the loan waiver for 40 lakh farmers at one go

Maharashtra’s finance minister Sudhir Mungantiwar will meet union finance minister Arun Jaitley in New Delhi later today with a request to give a direction to the Reserve Bank of India to allow a loan of Rs34,000 crore from nationalised banks with the repayment staggered over the next four years. The Centre has already refused any financial aid to the government led by the BJP’s Devendra Fadnavis.

During his meeting with Jaitley, Mungantiwar will request him to facilitate the loan of Rs34,000 crore at of 7-7.5% interest from various nationalised banks. (HT File Photo)

The Maharashtra government, reeling under a debt burden of over Rs4 lakh crore, wants to avoid paying for entire loan waiver for 40 lakh farmers at one go in the current financial year.

The Maharashtra government has now begun to tap the sources to raise the loans. During his meeting with Jaitley, Mungantiwar will request him to facilitate the loan of Rs34,000 crore at of 7-7.5% interest from various nationalised banks. He will also seek its deferred repayment over next four years so that the burden on the state exchequer is not more than Rs10,000 crore every year.

Significantly, state finance department had cautioned the government that raising funds would be difficult if the loan waiver amount went beyond Rs15,000 crore.

“We are requesting the Centre for the loan with staggered option which will result in the repayment of about Rs10,000 crore a year including the interest. If the request is conceded by the Central bank, there would be no need of more than 15% cut to the development fund in the annual budget. We will raise the rest of the amount from other sources and by saving through austerity measures,” Mungantiwar said.

However, if the Centre refuses to help the state government, the latter would face a stiff challenge, said state finance officials.

In such a scenario, the government will have to cut the state budget by more than 25%. It will have to raise a loan of Rs16000 crore in addition. “Besides the additional loan, we will raise Rs5000 crore from savings, Rs5000 crore from non tax revenues and rest from other sources,” the minister said. The government has planned to constitute a non-banking finance corporation (NBFC) to park the additional funds with government undertakings which are currently deposited with nationalised banks.