Jaitley rules out any central help in farm loan waiver by states

FIGHT IT ALONE FM makes it clear that state govts will have to generate their own funds to bail out farmers

At a time when chief ministers have been announcing farm loan waiver schemes to quell peasant discontent, Finance Minister Arun Jaitley on Monday made it clear that the Centre will not shell out any money and that states will have to bear the cost of such exercises.

Uttar Pradesh was the first state this year to announce a whopping Rs 36,359 crore farm debt waiver for small and marginal farmers. When asked about Sunday’s announcement by the Maharashtra government to do away with farmers’ loan, Jaitley made it clear that there will be no funding from the central coffers. “I have already made the position clear that states which want to go in for these kind of schemes (farm loan waivers) will have to generate them from their own resources. Beyond that the central government has nothing more to say,” Jaitley said.

Despite a bumper crop this Rabi season, farmers in many states are in distress because of sharp fall in prices of their produce in both domestic and global markets.

Reserve Bank Governor Urjit Patel had earlier warned of a likely fiscal crisis if states keep on doling out money in such a manner, which may also stoke inflationary expectations. “The risk of fiscal slippages, which by and large can entail inflationary spillovers, has risen with the announcements of large farm loan waivers,” the RBI said in its second bi-monthly monetary policy review for 2017-18 announced last week. — PTI