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Updated: August 18, 2009 21:10 IST

No fresh proposal on farm debt waiver: Pranab

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Finance Minister Pranab Mukherjee. Photo: V.V.Krishnan
The Hindu
Finance Minister Pranab Mukherjee. Photo: V.V.Krishnan

Exuding confidence that the economy would grow by over six per cent despite erratic monsoon, the government on Tuesday said it is not considering any fresh proposal for farm debt waiver even as over one-fourth of the country is reeling under drought.

"There is no such proposal," Finance Minister Pranab Mukherjee said when asked if the government was considering a fresh debt waiver scheme to give relief to farmers.

The UPA government had last year announced a nearly Rs. 71,000 crore farm loan waiver scheme to offer relief to small and marginal farmers and one-time settlement scheme for large ones.

Talking to reporters after holding a review meeting of Regional Rural Banks, he exuded confidence that the economy would clock over six per cent growth despite weak monsoon.

"No doubt, this year we are not expecting to reach nine per cent growth. This year we are projecting six per cent plus growth," he said, adding that the full impact of drought will be known to all as and when it is felt.

Meanwhile, Planning Commission Deputy Chairman Montek Singh Ahluwalia said the poor monsoon will adversely impact farm production and eat into economic growth.

"The existence of drought by itself can lead to some shaving" off of the growth projections. The impact, however, would not be much on the Gross Domestic Product (GDP) as agriculture production constitutes less than 20 per cent of the economy, Mr. Ahluwalia said.

On the impact of decline in farm output on economic growth, he said, "If you have decline in farm production, one fifth of that percentage would be knocked off from projected GDP growth rate. Obviously, there would be some effect but not very large".

Pointing out that Kharif (summer crop) will suffer on account of poor monsoon, Mr. Ahluwalia said, there would be no impact on Rabi (winter crop).

"The negative impact (of drought) will not be on the country as a whole, but in some affected parts. No doubt that the (farm) output of some states will fall and there will be some distress," he added.

As regards failure of monsoon, Mr. Mukherjee had said on Monday that drought has set in and the group of ministers (GoM) would meet on regular basis to review the situation and take measures to mitigate its impact.

According to reports, rainfall in the country between June one and August 12 has been 29 per cent below normal.

Agriculture Minister Sharad Pawar had said on Monday that 207 districts in the country are facing drought or drought like situation.

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