States must bear loan sop

Finance minister Arun Jaitley on Monday said the Centre will not partake in states’ fiscal leverage in waiving farm loans and made it clear that the cost has to be borne by them.

The stance of the Central government assumes significance against the backdrop of farm debt waiver announced by the Maharashtra government on Sunday even as the country has already witnessed violent protests from farmers in Madhya Pradesh a few days back, demanding a debt relief.

Uttar Pradesh was the first state this year to announce a whopping `36,359 crore farm debt waiver for small and marginal farmers.

Amid growing demand for a farm loan waiver in many states, Mr Jaitley on Monday made it clear that states will have to give it from their own resources and Centre can’t pitch in.

“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,” Mr Jaitley said.

Earlier Mr Jaitley had clarified that beyond what has been recommended by the 14th Finance Commission to be the share of states in the central revenue, Centre cant give any more money.

The Modi government had accepted 14th finance commission recommendations to increase states share in the central taxes by a record 10 per cent to 42 per cent.

Under pressure from farmer groups, Maharashtra government on Sunday announced a farm debt waiver in the state.

MP is seeing violet protests in last few days from farmers demanding a waiver on loans.