U P government is yet to find way to fund loan waiver scheme

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Published on: 2 Jun 2017 1:19 PM GMT
U P government is yet to find way to fund loan waiver scheme
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U P government is yet to find way to fund loan waiver scheme

Lucknow: The Uttar Pradesh government announced loan waiver more than two months ago but it has not yet disclosed how it has planned to go about it.

One way was to seek assistance from the Centre. However, Union finance minister Arun Jaitley had clarified before the UP cabinet could decide about it that it would not provide any loan for the purpose.

What he had not openly said was that assistance to this state would open flood-gate for similar demand by other states and. therefore, the best course was to refuse to oblige this state at the outset.

The alternative before the government after that was to issue a bond. But the permission for the same was not granted by the Reserve Bank of India.

The government is still pressing the Centre for assistance and has not lost hope totally. Simultaneously, it is looking for some other options.

Behind RBI's refusal the reason could be its bad financial position. The debt burden on the state has already crossed states' average of 21 per cent.

The alternative is to cut down non-plan expenditure and ask different departments to go for financial prudence.

All these measures, however, may not fully meet the requirement-- Rs 40,000 crore including Rs six thousand crore of NPA.

It is an additional burden, in addition to burden caused by decision to implement Seventh Pay Commission recommendations. With this the total additional burden will go up to Rs 70,000 crore.

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