Confusion over UP's farm loan waiver scheme continues
It gets worse confounded when one goes through the interviews given by chief minister Yogi Adityanath to one English and one Hindi dailies. In replies to question on the issue what he has said is different from what was stated during briefing after the cabinet meeting where the decision was taken.
State health minister Sidharth Nath Singh had told waiting media persons during the briefing that bonds will be issued to take care of the farm loan amount. "The money required to waive off loans will be raised through Kisan Rahat Bonds", he had declared.
Yogi, in reply to a question by an English daily which appeared on Friday, gave another narrative. He gave the impression that no bond was needed to fund the scheme.
Eight to ten thousand crores of rupees will be saved by prudent economic policies and saving wasteful expenditure. The rest of the amount needed for the purpose will be collected through additional resources. He did not elaborate, may be because he was not asked to do so .
In another interview which appeared the next day in a Hindi paper he is reported to have said that a committee has been formed headed by chief secretary to suggest ways to finance the scheme. The final decision on the subject will be taken after studying the committee report.
Clearly, the minister who briefed media persons was not properly briefed by the chief minister.
As far as the loans' total is concerned, it is whopping Rs 40,000-- Rs 36,000 taken by farmers from banks in recent months and the rest is Non-performing asset or NPA. Additional loans can be only taken after recovery of these bad loans or NPA.
The state government has gone for it despite opposition by economists and bankers . They had advised against it because it undermines credit culture and creates financial indiscipline.Whatever the Bharatiya Janata Party may say, it had made this promise before the state assembly elections to capture power. It was used as a political tool or sop to wean away farmers who were supporting the rivals.
The Centre has so far refused to help the state in this connection and asked it to fend for itself because otherwise many other states will put pressure for the same help.
However, it has made no impact. Some other considerations were also left out. One of them was the additional debt burden. The state has public debt to the tune of 30 per cent of the State Gross Domestic Product and ranks among the top ten debt-ridden states.
All this may lower the bond rates and affect the balance sheet. Future borrowings may also be hit.