PM’s loan waiver promise: UP to face challenges on financial front
Prime Minister Narendra Modi’s announcement to get the loans of farmers waived at the first cabinet meeting of BJPled government is likely to put further financial strain on the fund-starved government in UP.
A major challenge on the financial front stares the state government in the face as the new CM takes over in the coming days and decides to implement the PM’s poll announcement and BJP’s manifesto for 2017 assembly elections.
After the BJP legislature party elects new leader on March 16, the new chief minister is likely to be sworn in soon.
“We are getting ready with the basic information about total outstanding loans of the farmers and the financial implications of giving them interest-free loans. The PM has announced that a decision on loan waiver will be taken at the first meeting of state cabinet,” said a senior officer on condition of anonymity.
The PM in his election meetings only referred to waiver of farmers’ loans. The BJP’s manifesto, however, speaks about waiver of crop loans for small and marginal farmers.
“The BJP’s manifesto makes a mention of waiver of crop loan of small and marginal farmers. We are seeking details about total outstanding crop loans given by cooperative banks and commercial banks,” said the officer.
According to sources, commercial banks in the state had total outstanding of agriculture loan of Rs 1,25,000 crore up to December 31, 2016. The SP government had waived loans given to farmers by cooperative banks.
“We are working out details of total outstanding crop loan of cooperative and commercial banks due on small and marginal farmers,” said the officer. “Agriculture loans include the advance given to farmers to buy tractor and installation of tube wells. Crop loans will be less than total agriculture loans. We are working out the details of total outstanding loan amount,” said the officer.
Besides waiver of loans of farmers, the new government will have to meet the commitments made by the outgoing SP regime on various other fronts.
A few weeks before the announcement of 2017 assembly elections, the state government had announced the implementation of seventh pay commission recommendations for employees with effect from January 1, 2017. The decision has put an additional burden of Rs 18,000 crore per annum on the state exchequer.
The state government will have to bear a large chunk of this burden in 2017-2018. The state government proposes to pay arrears to the employees in two financial years – 2017-2018 and 2018-2019. This would mean an additional expenditure of about Rs 30,000 crore (Rs 18,000 crore on increased salaries and pension and Rs 10,000 crore on clearing arrears) in 2017-2018.
Besides this, the new government would also have to provide additional funds for a number of ambitious projects launched by the outgoing regime.
It may also decide to scrap some of the projects. It will, however, have to mobilise additional resources to meet the challenges on financial front.
The state government’s total indebtedness was Rs 2,09,227.32 crore on March 31, 2012 (the SP government took over on March 15, 2012). The state government’s total indebtedness is expected to reach Rs 3,75,049.45 crore on March 31, 2017.
The BJP’s manifesto makes a mention of waiver of crop loan of small and marginal farmers. We are seeking details about total outstanding crop loans given by cooperative banks and commercial banks UP OFFICIAL THE IMPLEMENTATION OF SEVENTH PAY COMMISSION HAS PUT AN ADDITIONAL BURDEN OF RS 18,000 CRORE PER ANNUM ON THE STATE EXCHEQUER