NEW DELHI: The Opposition may not have budgeted for this. The UPA government, which has decided to kickstart the waiver programme in 2007-08 itself (zero year), will be releasing Rs 25,000 crore in cash to banks by July 2008. Put simply, it will have to provide two-thirds of the total Rs 60,000-crore farm-waiver package in cash within 14 months.
The government will need to tap tax revenues, non-tax revenues such as dividends, interests, royalties and fees, non-debt capital receipts such as recovery of loans and advances, premium on the sale of sequestered assets, and the initial listing of state-run companies for finding resources for the farm package. Replying to the debate on Budget 2008-09, finance minister P Chidambaram said: “The government would make additional allocations if necessary.”
The process of identifying beneficiary farmers would be completed by June 30, 2008. “RBI and Nabard have asked scheduled commercial banks, regional rural banks (RRBs) and co-operative institutions to give branch-wise data on the overdue accounts by March 14, 2008. RBI and Nabard will submit the data to the government by March 20,” Mr Chidambaram said.
The money would provide banks liquidity equivalent to the debt waiver. They would wipe out farmers’ loans by June 30 to make them eligible for institutional credit, the FM added.
In the disbursement plan, which would be spread over the next three years, Rs 15,000 crore would be provided in 2009-10, Rs 12,000 crore in 2010-11 and Rs 8,000 crore in 2011-12. In 2008-09, it would be 0.25% of the GDP and it will go down in the subsequent years. The minister pointed out that the government had already found Rs 10,000 crore in the current fiscal for the debt-relief fund.
The FM said the buoyancy in tax receipts and the government’s fiscal prudence have given it the “fiscal space” to announce the Rs 60,000 crore loan-waiver package for the debt-laden farmer. He said direct tax collections, which had far exceeded Budget targets in the last four years and indirect tax collections, which also surpassed Budget targets, provided the government enough headroom. Besides, the reduction in fiscal deficit would be 2.5% of the GDP instead of 3% as mandated in the FRBM Act.
The government will need to tap tax revenues, non-tax revenues such as dividends, interests, royalties and fees, non-debt capital receipts such as recovery of loans and advances, premium on the sale of sequestered assets, and the initial listing of state-run companies for finding resources for the farm package. Replying to the debate on Budget 2008-09, finance minister P Chidambaram said: “The government would make additional allocations if necessary.”
The process of identifying beneficiary farmers would be completed by June 30, 2008. “RBI and Nabard have asked scheduled commercial banks, regional rural banks (RRBs) and co-operative institutions to give branch-wise data on the overdue accounts by March 14, 2008. RBI and Nabard will submit the data to the government by March 20,” Mr Chidambaram said.
The money would provide banks liquidity equivalent to the debt waiver. They would wipe out farmers’ loans by June 30 to make them eligible for institutional credit, the FM added.
In the disbursement plan, which would be spread over the next three years, Rs 15,000 crore would be provided in 2009-10, Rs 12,000 crore in 2010-11 and Rs 8,000 crore in 2011-12. In 2008-09, it would be 0.25% of the GDP and it will go down in the subsequent years. The minister pointed out that the government had already found Rs 10,000 crore in the current fiscal for the debt-relief fund.
The FM said the buoyancy in tax receipts and the government’s fiscal prudence have given it the “fiscal space” to announce the Rs 60,000 crore loan-waiver package for the debt-laden farmer. He said direct tax collections, which had far exceeded Budget targets in the last four years and indirect tax collections, which also surpassed Budget targets, provided the government enough headroom. Besides, the reduction in fiscal deficit would be 2.5% of the GDP instead of 3% as mandated in the FRBM Act.
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