Centre won’t foot bill, says Jaitley amid clamour for loan waivers

The Centre will not assist State governments’ decision to undertake fiscal leverage in waiving farm loans, Finance Minister Arun Jaitley reiterated on Monday.

Published: 13th June 2017 01:50 AM  |   Last Updated: 13th June 2017 04:55 AM   |  A+A-

Finance Minister Arun Jaitley (File | PTI)

By Express News Service

NEW DELHI: The Centre will not assist State governments’ decision to undertake fiscal leverage in waiving farm loans, Finance Minister Arun Jaitley reiterated on Monday. “Costs of such decisions have to been borne by the State governments,” Jaitley said after a meeting with senior bank officials. 

The Finance Minister’s clarification comes at a time when the Madhya Pradesh and Maharashtra governments have sought the Centre’s support to waive farm loans following an agrarian unrest that is spreading across the country. Protests that erupted in Madhya Pradesh and Maharashtra, with demands that included ‘UP-like’ loan waivers, have spread to Haryana, Punjab, Rajasthan and Chhattisgarh.

Farmers in Tamil Nadu, who held a month-long demonstration in New Delhi, also revived protests for loan waivers.

Earlier last month, Uttar Pradesh announced a mega loan waiver worth `36,359 crore for small and marginal farmers whose loan burden does not exceed `1 lakh. On Sunday, Maharashtra too announced a farm loan waiver, ending a simmering stir in the State. 

“I have already made the position clear. States like Maharashtra, which want to go in for these kinds of schemes will have to generate money from their own resources. Beyond that, the Central government has nothing more to say,” Jaitley said.

Earlier last week, Reserve Bank of India Governor Urjit Patel warned against mega loan waivers. “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. 

Earlier this year, State Bank of India chairperson Arundhati Bhattacharya had also warned policy makers against extending farm loan waivers, calling it a ‘major problem’ in maintaining credit discipline. “Money will come in today because government will pay, but when we will give loan in future, farmers will wait for next elections. Support to the farmers is necessary but not at the cost of credit discipline,” she had said. 

‘Bad loan borrowers list soon’  

Jaitley said RBI was at a fairly advanced stage in preparing a list of borrowers with bad loans and claimed ‘action on this front is expected soon’. “You will be shortly hearing about it… RBI is actively working on that,” he said

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