NEW DELHI: A ‘rural manifesto’ may have helped the Congress win the three heartland states in the recent Assembly elections. But keeping those promises won’t be easy. The massive expenses that the farm loan waivers, higher pensions and unemployment stipends entail will put a heavy burden on the states’ exchequer.
Amid intense anger among farmers against the incumbent state governments, the Congress had promised farm loan waiver, hiking the minimum support price and giving a bonus and direct financial benefits such as money for daughter’s marriage and so on, to please the rural population.
To fulfil these promises is going to be an uphill task for the newly elected state governments as the financial condition of at least two states — Rajasthan and Madhya Pradesh — is in the doldrums.
MP, which is reeling under a debt of over Rs 1.60 lakh crore (as per finance department gazette), a loan waiver to farmers is expected to cost the government around Rs 50,000 crore.
A September 2017 RBI study had estimated that to waive off crop loans up to Rs 1 lakh per indebted farmer, MP will need to spend over Rs 16,000 crore. The Congress has promised loan waivers up to Rs 2 lakh. The State Level Bankers Committee has noted that the total crop loan outstanding was close to Rs 75,000 crore as of March 31. Given these facts, the actual burden on the exchequer will be significantly higher than the RBI figure.
The financial condition of Rajasthan is even more abysmal, with the state inheriting a debt of Rs 3 lakh crore. While the RBI study estimated a total burden of Rs 22,000 crore in case of waiver up to Rs 1 lakh, the figure reported by a local newspaper is pegged around Rs 99,000 crore. The news report, citing a Banking Committee March 2018 report, said 59 lakh farmers had loans in their accounts.
Contrary to the two big states, Congress is receiving a financially stable Chhattisgarh. The RBI study had estimated the waiver to cost Rs 3,000 crore to the state, while other sources estimate it to be around Rs 5,000 crore. Besides the waiver, implementing the MSP hike for paddy from Rs 2,100 to Rs 2,500 is also going cost a significant amount.
Keeping promises to youths is also going to cost the new state governments a large sum, especially in Rajasthan where the unemployment rate is over 12 per cent. The Congress in its manifesto had announced a monthly stipend of up to Rs 3,500 to youth without jobs.
In MP it has promised to pay Rs 4,000 for five years to workers of certain categories, while in Chhattisgarh a monthly stipend to 10 lakh jobless youths has been promised.
All the three newly elected CMs have said they will waive off farmers’ loan in 10 days. How they’ll do it will be keenly watched.