by Harish Gupta, National Editor, Lokmat Group
Modi considering Farm Loan Waiver Scheme
Rs 2 lakh crore bonanza on cards to farmers, weavers, artisans, middle class
Interim budget will be full of free-bees
Harish Gupta
New Delhi, Dec 20
After debunking the farm loan waivers by the Congress governments at the Centre and states, Prime Minister Narendra Modi is seriously toying with the idea of giving massive sops to the farm sector including a loan waiver scheme.
The PMO is of the considered view that loan waiver schemes had helped the parties winning the elections. It was tried by the VP Singh-Devi Lal combine during the 1989 Lok Sabha poll campaign and helped immensely. The final cost to the Central Exchequer in 1990 was Rs 10,000 crores. In 2008, the Manmohan Singh government waived the loans for farmers to the tune of Rs 52260 crores and returned to power.
Highly placed sources in the PMO say that data is being collected on a war-footing basis to identify the number of farmers in each state who will require National Loan Waiver benefits. The loan waivers worth more than Rs 2 lakh crores crores to send a strong signal to the farming community that the Modi government is serious about their well being and taking them out of the distress.
The government has already asked the RBI interim dividend and may also seek extra money within the next one and a half months. A high powered committee will be constituted shortly to lay down guidelines as to how much money RBI will need in its reserve. This committee will be asked to submit its report within 20 days and pave the way for massive transfer of funds from RBI to the government.
Though the BJP leadership has not undertaken a detailed review of the recent losses in the state assembly polls (or not shared reasons of its defeat with the media), it is under pressure to give doles to the various sectors before the Lok Sabha polls are announced in February-end March-first week.
It has been decided that loans will be waived for the weavers community and artisans which are mostly in UP. Similarly, the middle-class will be given some tax rebates. The PM has already announced massive GST relief brining tax regime from 28% to 18%. This will hit the government by another Rs 20000 crores a year. This loss can be off-set if the buoyancy in the economy comes soon.
Those facing GST penalties and other problems may also be given one time amnesty so that they can get rid of harassment.
In order to garner support from the 263 million farmers and their many millions dependents, the Modi government would move towards waiving loans to create a positive climate.
The party leadership feels that Modi's personal graph has not been dented even after the loss of power in three Hindi speaking states. Therefore, immediate relief measures even if they are to the tune of Rs 2 lakh crores or above, could turn the tables nationally in favour of BJP for the Lok Sabha polls.
Insiders say nothing less than the massive doze of concessions to all the sections including the MSMEs, GST, Farmers, weavers & Middle-class will work in favour of Modi.
Economists including NITI Aayog have already cautioned that farm loans waivers would widen a fiscal deficit which has been capped at 3.3 per cent of its gross domestic product (GDP), or Rs 6.24 lakh crore.
Ends
