Badal meets Modi amid Rs 20,000-cr credit logjam

  • HT Correspondent, Hindustan Times, Chandigarh
  • Updated: Apr 21, 2016 15:20 IST
Punjab chief minister Parkash Singh Badal (HT File Photo)

The logjam over the Rs 20,000-crore cash-credit limit (CCL) for buying wheat in Punjab remained unresolved while chief minister Parkash Singh Badal met Prime Minister Narendra Modi in New Delhi on Monday to discuss the crisis that has assumed political overtones in the poll-bound state.

Wheat procurement started on April 1 but the Centre is yet to sanction the CCL due to Punjab’s failure to account for the Central money released for procurement payments in previous years.

Read: SBI asked to make provisions on food grain loans to Punjab

Read: Grains missing from godowns, RBI delays Rs 20,000-cr credit

Grain markets overflowing

This has resulted in a deadlock while the grain markets across the state are overflowing with wheat, but the farmers are not getting paid for their produce. By Sunday evening, over 36 lakh metric tonnes (MT) of wheat had arrived in the grain markets across the state of which 31 lakh MT has been procured by five government agencies. The state is expecting over 1.20 lakh MT arrivals this year.

Alarmed by the looming procurement crisis and the anger among farmers, Badal rushed to Delhi on Monday and had an unscheduled meeting with Modi. The Punjab government termed the meeting “fruitful” and claimed that the PM assured of “positive action” to resolve the crisis. But there was no official word from the lending banks till late Monday evening as to when the CCL sanction will be given to the Punjab government.

“The CCL sanction is expected anytime,” a senior state government functionary said.

During his 20-minute meeting with Modi, the CM, who was accompanied by food and civil supplies minister Adaish Partap Singh Kairon, sought the PM’s intervention for immediate release of the CCL so the state government could make payment to the farmers.

“Badal told Modi that inordinate delay in the CCL clearance could lead to disaffection in the farming community which might lead to law and order complications,” a spokesperson of the CM office said.

Govt to push its case

It is learnt that the government on Tuesday will send more documents to the Centre about its existing food stocks to buttress its case for an early sanction of the CCL.

The State Bank of India (SBI), which heads the consortium of banks in giving the CCL, is pointing out “mismatch” between the existing food stocks and the CCL sanction for 2015-16.

But the government on April 13 told the SBI: “There is no mismatch in the CCL account. Accordingly, keeping in view the urgency, you are requested to take up the matter urgently with the RBI for early authorisation of the CCL.”

This twin trouble of the delay in the CCL sanction and the mismatch in food stocks has embarrassed the Badal government. More so, farmers form a major part of the Akali Dal’s core constituency and keeping in view the assembly elections due early next year, the Badal dispensation is worried about the farmers’ backlash and the opposition exploiting the issue.

Cong forms panel

Meanwhile, sensing an opportunity to put the government on the back foot on the procurement muddle, the Congress on Monday constituted a high-level committee, with senior vice-president Lal Singh as coordinator, to monitor wheat procurement.

The Congress panel will hold its first meeting on April 20 in Chandigarh to chalk out the next action plan and visit all mandis of the state.

The CCL muddle

The Reserve Bank of India (RBI) sanctions the CCL for procurement

Punjab has sought Rs 20,000 crore CCL for wheat procurement

The consortium of banks led by the State Bank of India parks the money in the CCL account

The government procures the grains and farmers are paid through commission agents

Also, the expenses of handling and transportation of grains from grain markets to godowns are met from the CCL account

Then the food stocks are handed over to the Food Corporation of India

The FCI makes the payment of food stocks to the state government which then returns the money to the CCL account

But in this whole exercise, the state also legitimately earns huge profits

Read: AAP to set up help desk in grain markets

Read: Punjab dug into central funds to bankroll atta-dal scheme

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