The Centre is not considering any proposal for farm loan waiver, Finance Minister Arun Jaitley said today, a day after Punjab approved waiving of loans for nearly 10 lakh farmers in the state. “There is no such proposal. We have got FRBM Act and fiscal deficit target, we intend adhering to it,” he said here. In Union Budget 2017-18, the fiscal deficit has been pegged at 3.2 per cent, lower than 3.5 per cent in the last financial year. The Fiscal Responsibility and Budget Management (FRBM) committee, headed by former revenue secretary N K Singh, has recommended keeping budgetary deficit at 3 per cent of the GDP in three years to March 2020. It also suggested progressively reducing it to 2.5 per cent by 2022-23.
Despite a bumper crop this rabi season, farmers in many states are in distress because of sharp fall in prices in both domestic and global market. Farmers in various parts of the country have been agitating, seeking higher support prices for their produce as well as waiver of loans. The central government stance assumes significance against the backdrop of farm loan waiver already announced by Maharashtra and Uttar Pradesh even as the country recently witnessed violent protests from farmers in Madhya Pradesh demanding debt relief. Uttar Pradesh was the first state this year to announce Rs 36,359 crore farm debt waiver for small and marginal farmers.
Punjab yesterday announced total waiver of crop loans up to Rs 2 lakh of small and marginal farmers, and a flat Rs 2 lakh relief for all marginal farmers, irrespective of the loan amount. Jaitley had stated earlier that the central government will not partake in states’ fiscal leverage in waiving farm loans, and made it clear that the cost has to be borne by the states. Reserve Bank Governor Urjit Patel has already warned of fiscal situation likely to be going out of hands if states keep doling out funds and may stoke inflationary expectations. RBI keeps a close tab on retail inflation to decide on its monetary policy tools such as the repo rate – at which it lends to banks.