Punjab Finance Minister Manpreet Singh Badal today blamed commercial banks for “unethical” loaning to farmers which made growers “debt ridden”.
He also asserted that debt waiver alone would not help distressed growers.
“I was told that when commercial banks gave loans to them (farmers), they were very unethical. While a cooperative bank does not extend loan more than Rs 40,000 per acre, they (commercial banks) gave Rs 5 lakh per acre,” Manpreet said while talking to reporters here.
Badal, who presented the state budget for the year 2017- 18 in Punjab Vidhan Sabha, stressed that the government would take up the matter with bankers to ensure farmers are not extended loans more than their requirements.
Asked whether the Rs 1,500 crore budgeted for farm debt waiver was sufficient, Manpreet acknowledged it was a small amount but would enable the government to repay farmers’ instalments for one year.
“We will become the debtor of the banks as we are ready to give sovereign guarantees. We will take over the farmers’ debt,” he said, adding that the government would pay debt waiver amount from its own resources.
He said each year the state government would make a provision for the debt waiver amount while adding that the expert panel set up on debt waiver would work out exact amount of farmers’ debt in the state.
Yesterday, Punjab Chief Minister Amarinder Singh had announced total waiver of entire crop loans up to Rs 2 lakh for small and marginal farmers (up to 5 acres), and a flat Rs 2 lakh relief for all other marginal farmers, irrespective of their loan amount which would benefit a total of 10.25 lakh farmers.
Asked whether the debt waiver would cover commercial banks’ loans, he said, “It will cover loan taken from PSU banks, commercial banks including cooperative banks.”
He said government would also make an arrangement with banks to work out the modalities for loan waiver which might include one time settlement.
“Punjab is probably the most indebted state in terms of agriculture in the country,” he noted.
“I agree, solution lies in multi-pronged approach and debt waiver alone will not help the farmer. We will have to create employment opportunities for farmers’ children and provide them necessary skills to enable them to stand on their feet,” the minister added.
Regarding additional liability of Rs 29,919.96 crore on account of cash credit limit legacy accounts taken by the previous regime, he said the state government will conduct third party audit in this regard.
Badal acknowledged that the state would be unable to contain fiscal deficit at 3 per cent limit as per FRBM Act, 2003, mainly due to the additional debt servicing liability and the “dilapidated finances that we have inherited.”
“As of now the net borrowing limit of the state has been fixed at Rs 12,819 crore by RBI. This leaves a funding gap of Rs 10,273 crore this year. This gap would need to be covered during the course of the year through Additional Resource Mobilisation (ARM) and control of revenue expenditure.”
“I would like to first see the impact of GST on the resources of the state during the year before I suggest any Additional Resource Mobilisation,” he said.
He further said that the government would soon establish debt reconciliation boards in every district to resolve cases pertaining to loans taken by farmers from informal sectors.