Govt to tighten its belt to reduce impact of farm loan waiver

Govt to tighten its belt to reduce impact of farm loan waiver

Govt to tighten its belt to reduce impact of farm loan waiver

Faced with a paucity of funds, the state government may resort to cutting down on budgetary allocations to some of the departments in order to mobilise resources for crop loan waiver.

The government has to reimburse Rs 8,167 crore to Primary Agriculture Co-operative Societies (PACs) and District Credit Co-operative Banks (DCCBs) following its decision to waive short-term crop loans up to Rs 50,000 availed by each farmer.

Around 22.27 lakh small farmers are expected to benefit from the move.
“We will manage it (resource mobilisation) within the budget by making cuts here and there. We will review the financial situation as the year progresses and take a call (sic),” Additional Chief Secretary to the Finance Department I S N Prasad told this paper when asked how the government planned to fund the loan waiver. He, however, did not divulge details of the plan to cut down allocations.

Sources in the government said the Finance Department has recommended to the government to make use of allocations under certain heads which are likely to remain unutilised. The PWD, the Water Resources, the Urban Development and the Animal Husbandry are some of the departments identified for this purpose. Of the total Rs 8,167 crore crop loan waived, the outgoing in the current financial year is estimated to be around Rs 5,000 crore. And the remaining amount will be allocated in the 2018-19 budget, the sources pointed out.

Besides, the government has also decided to tighten the belt and do away with unnecessary and wasteful expenditure in the coming days. The government cannot afford to default on payment to PACs and DCCBs as it will, in turn, affect agricultural lending. As many as 5,098 PACs and 21 DCCBs are involved in agricultural lending in the state. The farmers had borrowed about Rs 10,736 crore from them in the financial year 2016-17.

Besides cutting down on budgetary allocations and unnecessary expenditure, the government is hopeful that it will be able mobilise more revenue from the Excise than what has been estimated in the budget.

Unlike the previous BJP government headed by Jagadish Shettar, the Congress government has decided not to impose fresh taxes for mobilising resources, lest it would antagonise the electorate ahead of the crucial 2018 Assembly elections. The Shettar government had increase the VAT rate by 0.05 % to fund its crop loan waiver in 2013.

Balancing act

Govt to cut down on allocations to some depts to mobilise resources.

It will have impact on many projects and programmes announced in the budget.

The govt has to mobilise around Rs 5,000 crore of the total Rs 8,167 crore in the current fiscal.