UP to float Farmers’ Relief Bond for composite waiver amount; decision to benefit 21.5 mn farmers
Within a fortnight of taking office, the-led Bharatiya Janata Party (BJP) government in Uttar Pradesh (UP) on Tuesday fulfilled its key poll promise, writing off crop loans of up to Rs 1 lakh for about 21.5 million small and marginal farmers.
The total waiver will be of Rs 36,359 crore — one of the highest-ever promised by a state.
Of this, Rs 5,630 crore of NPAs, or non-performing assets, of 700,000 farmers will be immediately waived. This would not only enable these farmers to seek new loans, but also clean up the account books of the banks involved. According to the official data, there are 23 million farmers in UP, of whom about 92.5 per cent, or about 21.5 million, belong to the small and marginal segments.
State Health Minister and Spokesperson Siddharth Nath Singh said the government would bear the entire burden, with no help from the Centre. He also said the state government would raise the money by floating “farmer relief bonds”.
“This is for the farmers of the state on the occasion of Ram Navami, and a step towards building Ram Rajya (kingdom of Ram),” Deputy Chief Minister Dinesh Sharma said.
Considering the burden on the state’s finances and to keep the fiscal deficit under the stipulated 3 per cent mark, the state would float Farmers’ Relief Bond to the tune of the composite crop loan waiver amount.
In 2016-17, UP had budgeted for a fiscal deficit of Rs 49,960 crore (4.04 per cent of the gross state domestic product, or GSDP, including the Ujwal Discom Assurance Yojana, or UDAY. But it ended up climbing to Rs 55,020 crore (4.45 per cent of GSDP). At a time when the state is also staring at its Pay Commission obligations, any additional burden is bound to be fiscally ruinous.
The state has budgeted to bring the deficit down to three per cent in 2017-18 (provisional), but if the past is anything to go by, it seems unlikely. In 2015-16, it had projected a fiscal deficit of Rs 31,559 crore of 2.87 per cent of the GSDP. But it ended up climbing to Rs 58,475 crore, or 5.3 per cent of the GSDP.
“The crop loan waiver scheme would be put before the state assembly meeting during its forthcoming Budget session for approval,” Singh said.
He also referred to the distress in the state farm sector due to the vagaries of floods, drought and hailstorms in the past years. ()
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