Punjab govt can’t take over farm debt, must take loan for it: Bankers’ panel
According to the state government proposal, it planned to own up (take liability for) Rs 9,500-crore loans and the banks were to paid in four-five instalments.punjab Updated: Jul 22, 2017 18:11 IST
Saying that the Punjab government could not take over farmer’s outstanding debt, as there was no precedent for this anywhere in the country, the State-Level Bankers Committee (SLBC) has pressed it to settle the waiver issue at the earliest.
The bankers, instead, want the state government to raise loans or bonds, of the amount it wanted to waive off the farmers debt. Significantly, the state’s finances are not in pink of health.
According to the state government proposal, it planned to own up (take liability for) Rs 9,500-crore loans and the banks were to paid in four-five instalments. The SLBC conveyed this viewpoint to Punjab principal secretary, finance, Anirudh Tiwari at a meeting on Friday.
“There no rule or precedence for such an arrangement, and if it is done in Punjab’s case other states would also seek a similar arrangement,” said the official, adding that Punjab needed to act fact as the banks’ loan had been piling up.
‘No loans for budgetary allocation’
The SLBC also clarified that banks could not give loans to the government on the basis of a budgetary allocation. “We need a specific concrete proposal from the government,” it clarified. A delegation from the SLBC is meeting finance minister Manpreet Singh Badal on July 25.
Incidentally, the state government has been working overtime to settle the issue with chief minister Captain Amarinder Singh meeting union finance minister Arun Jaitley on Thursday, seeking his intervention for one-time settlement of Rs 6,000 crore loan taken by state farmers from government-owned and private banks benefitting 4.5 lakh farmers.
The government is working out an arrangement with state-owned Punjab State Cooperative Bank and its subsidiary district level cooperative banks to waive off another Rs 3,600 crore loan on farmers.
Over 10 lakh small, marginal farmers to benefit
The waiver of Rs 9,500 crore is expected to benefit 10.25 lakh small and marginal farmers. Estimates put the state’s farmer under a debt of Rs 90,000 crore till March 2016. Most stressed are those with land holdings between 2.5 acres and 5 acres (small farmers). As many as 5.71-lakh own up to 2.5 acres (marginal farmers) and they under a cumulative debt of Rs 9,845 crore.
Only 35,000 farmers account for a debt of ₹4,500-crore. This implies that each owes ₹13 lakh. It also means that 20% of farmers (2 lakh) have a burden if Rs 63,000 crore (75% of total loans); this is a cause of concern. A notification on the waiver is expected in September-October.
The government has formed a panel to make recommendations on debt waiver headed by T Haque, former chairman commission for agricultural costs and prices.
- A day after Punjab chief minister Captain Amarinder Singh met Union finance minister Arun Jaitley, bankers said such an arrangement had never taken place in the country and if implemented will impact other states where farmers’ debt is an issue
- A delegation of SLBC will meet Punjab finance minister Manpreet Badal on July 25
- State-level Bankers Committee (SLBC) says the state cannot take over farmers’ loans; the government needs to raise loans or bonds from the banks of the amount it wished to waive off, RBI could allow special permission
- Banks also push government for an early decision; claims that due to non-payment, debt on their books is piling up
First Published: Jul 22, 2017 09:18 IST