The government is worried about mounting debt among India''s farmers and their ability to pay so Budget 2008 could see a huge write off of farm loans, according to finance ministry sources. The debt relief package could range between a massive Rs 60,000 to Rs 100,000 crore.
These estimates are based on farm loans disbursed upto December 2007. It is unlikely that there will be any cap on the size of the loan. If only marginal and small farmers are considered then the loan waiver would cost about Rs 60,000 crore. Such a massive loan waiver will be coming in the backdrop of a sharp dip in the growth forecast for agriculture. It is believed that this could seriously jeopardise the 9 per cent growth story of India.According to the Finance Minister P Chidambaram, the government''s highest priority is agriculture.Although the details of the debt relief package are still being worked out, finance ministry officials pointed out that the Centre and states might share the cost of the debt relief package.In addition there could also be a farmer cess, which could be levied on direct as well as indirect taxes just the way the finance minister raised the education cess by 1 per cent in the last budget.
These estimates are based on farm loans disbursed upto December 2007. It is unlikely that there will be any cap on the size of the loan. If only marginal and small farmers are considered then the loan waiver would cost about Rs 60,000 crore. Such a massive loan waiver will be coming in the backdrop of a sharp dip in the growth forecast for agriculture. It is believed that this could seriously jeopardise the 9 per cent growth story of India.According to the Finance Minister P Chidambaram, the government''s highest priority is agriculture.Although the details of the debt relief package are still being worked out, finance ministry officials pointed out that the Centre and states might share the cost of the debt relief package.In addition there could also be a farmer cess, which could be levied on direct as well as indirect taxes just the way the finance minister raised the education cess by 1 per cent in the last budget.
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