Uttar Pradesh may open a floodgate for loan waiver demands
Lucknow: Uttar Pradesh may open a floodgate for farm loan waiving demands. The Maharashtra government has already asked the concerned officials to study the UP loan waiver scheme. Punjab chief minister Capt. Amrinder Singh is likely to press the high command to strongly raise this demand. Some others may follow suit.
Like this state, the Maharashtra government may waive off farm loans as its partner, the Shiv Sena, has been insisting on it since long. The pressure is likely to increase now after the most populous state has gone for it and there is Bharatiya Janata Party led government both in the state and at the Centre.
It may not be easy for Punjab to implement the scheme because it is being ruled by a different party, the Congress, and the avowed aim of the BJP is to make the country Congress Mukt. Support to the party in this respect is highly unlikely unless it changes its stand. It can always find an excuse.
In defence of the scheme which will put additional burden on the hard-pressed UP, the new government has said that it has done it to just fulfill the promise it had made to the people on the even of elections. Also that it had got a mention in the party's election manifesto too.
The government has already taken a decision and made it known to all. However, a few things are still not clear . The government has proposed to issue Kisan Rahat Bonds to meet the additional burden which will be of the order of Rs 36,000 crores. But status of these bonds is yet unknown. If these are given the Statutory Liquidity Ratio or SLR Status, banks which have provided farm loans can easily redeem them in the market.
Another vexing issue is the net debt burden on the state. According to a finance department official, the state is under debt to the tune of over Rs four lakh crores which is more than 30 per cent of the State Gross Domestic Products. It is more than the norm set by the central government. So the question is : will the central government provide additional loan to it or will the state government go for market borrowing to collect additional fund? There is no clarity on these issues so far.
It appears in this light that the government has rushed through the scheme without considering all the aspects. It might have hurried because before the elections the party had promised to waive off loans at the first cabinet meeting if it was voted to power. So, it could not wait.
The decision also makes it clear that it has learnt no lesson from the past. A country-wide loan waiver scheme was announced by the Congress-led government in 2008. A study was made by Public Accounts Committee of parliament after implementation of the scheme in which many discrepancies were found.
Beneficiaries were found to be unreal in many cases. In the selection process too there was pick and choose. In all , the PAC had detected 22 per cent irregularities. The scenario may not be different in this state unless it takes adequate safeguards .
Looking back, it appears that the governments in several states have used it in the past as a political tool or sop to garner support. The BJP government in Uttar Pradesh which assumed power last month has not acted differently, though it claims to be a party with a difference.