Maharashtra may be a path breaker, may not toe UP line on loan waiver
New Delhi: Maharashtra has an answer to those who are looking for another option. other than loan waiver,to help the farmers and cause no harm to the financial growth of the state.
Instead of waiving loans the government there is in favour of grant or subsidy to farmers to create durable assets which can improve their earnings in future and help the agriculture sector contribute more to the State's Gross National Product .
Better earning can help both the government and the farmers. They can slowly clear the farm dues and government can gainfully employ the money saved this way to help others and improve the financial health of the state.
It will also help in maintaining financial discipline and end the vicious circle. Waiving off loans encourages them to demand again even if that is not needed and press for waiver on the eve of elections. Thus, a vicious circle is created.
It is one state which is not inclined to toe Uttar Pradesh line. Farmers in several states in the country were making this demand after new government in Uttar |Pradesh decide to waive off farm loans. Besides farmers, the Maharashtra government was under pressure from its political partner, Shiv Sena, to do so. However, it is working on a different policy option.
It is not that Uttar Pradesh has a good financial health but still it opted for it because it had used the waiver as a political tool and announced it before the recent assembly elections The government in the state has more than 30 per cent of the State GDP as loan whereas the the country's average is 21 per cent. The waiver involved more than eight per cent of its revenue.
Maharashtra, according to official reports available here, is much better off. The total debts of the government stands at Rs 3.54 lakh crores at present. This would increase by around Rs 35,000 crores after the farm loan waiver.
The subsidy or grant which will be provided to farmers may be used for creating durable assets in fields of infrastructure and irrigation, particularly drip irrigation.
The Maharashtra government will entail a burden of about Rs 10,000 crores by providing grant or subsidy which is far less than what it would carry by waiving farm loans.