₹24,723-cr supplementary budget gives ₹15K-cr for farm loan waiver

Supplementary demands, fourth highest in the past five years, made to fulfil poll promises of MVA allies

In a bid to fulfil its poll manifesto promise of farm loan waiver by all allies, the Maharashtra Vikas Aghadi (MVA) government on the first day of the budget session on Monday had to table a supplementary budget worth ₹24,723 crore, the fourth highest such budget in the past five years. Of the total amount, ₹15,000 crore is for loan waiver for farmers.

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The demands were tabled two weeks ahead of the state budget for 2020-21 on March 6. Supplementary budget refers to additional expenses and grants made for unforeseen circumstances, which are over and above the annual budget.

The state government has identified 35 lakh eligible farmers who have an outstanding loan of less than ₹2 lakh until September 2019, the cut-off date for the waiver. The expected burden on the state exchequer towards the waiver is ₹29,712 crore. The state rolled out the scheme on Monday, crediting the waiver amount in accounts of 4,500 of the 15,358 eligible farmers from 68 villages in the first phase. The state had raised ₹10,000 crore from the Contingency Fund last week for the waiver. The amount raised from the fund was recouped and some additional funds earmarked were through the supplementary demands. Besides the loan waiver, ₹1,417 crore has been earmarked for concessions given in electricity for agriculture pumps and power looms for the financial year.

According to officials, the loan waiver could disturb the state finances for the current and next fiscal year. After a provision of ₹15,000 crore this year, the government is expected to make a provision for the same amount in the budget to be presented next month for the next financial year. Against the budget of ₹4.04 lakh crore for 2019-20, the supplementary grants raised during the year stood at ₹65,621 crore (16%) of the budget.

Rupesh Keer of Samarthan, NGO which studies state finances, said raising such a huge amount through supplementary demands was a bad precedent. “It shows bad planning of the annual budget of the state. Secondly, 88% of the supplementary demands of ₹24,723 crore are for four departments – cooperation (₹15,000 crore), revenue (₹3,537 crore), public works (₹1,969 crore) and industries and energy (₹1,477 crore), which indicate imbalance in spending within departments,” he said.

From 2014 to 2019, the Fadnavis government, too, had to raise enormous funds through supplementary demands in five years and crossed all previous records, according to the officials from the finance department. The previous government had tabled a supplementary demand of ₹33,534 crore, the highest ever, after it announced a loan waiver in June 2017. In December the same year, a supplementary demand of ₹26,402 crore was tabled by the government. In June 2019, ahead of the Assembly polls, the supplementary demands tabled amounted to ₹24,777 crore.