Centre approves cash credit to Punjab for food procurement

NEW DELHI: The Union cabinet on Monday approved settlement of legacy food cash credit accounts (up to crop season 2014-15) of the Punjab government for food procurement operations.

This proposal of department of expenditure was approved by Prime Minister under Rule 12 of (transaction of business) Rules, 1961, on January 2, 2017, an official statement said.

It further said early settlement of legacy issues will help banks in disbursement of food credit in the larger interest of numerous farmers of the state and uninterrupted continuity in food procurement operations to ensure food security for the nation.

Settlement of outstanding cash-credit limits (CCL) account by availing term loan by the Punjab government would entail savings in terms of interest payment, the statement said, adding “this will create additional resource enabling Punjab government to undertake capital expenditure”.

The outstanding amount in cash-credit accounts of Punjab up to kharif marketing season 2014-15 amounting to about Rs 31,000 crore shall be converted into a term loan. It will be repayable in half-yearly instalments over a period of 20 years with the option for pre-payment. The terms and conditions of the loan shall be as prescribed by the Reserve Bank of India (RBI) and the lending banks, the statement added.

Noting that the 14th Finance Commission has prescribed the fiscal roadmap for each state for its award period 2015-20 and anchored their fiscal deficit to an annual limit of 3% of state’s gross state domestic product (GSDP), the statement said.

PUNJAB’S OUTSTANDING AMOUNT OF ₹31,000 CRORE IN CASHCREDIT ACCOUNTS UP TO 201415 WILL BE CONVERTED INTO A TERM LOAN