Gearing up for elections, Chief Minister Devendra Fadnavis intends to follow in the footsteps of his Jharkhand counterpart, Raghubar Das, by offering a year-long liquidity at ₹5,000 per month to every farmer in the State, which will provide them a liquidity top up of ₹60,000 over the whole year.
The ongoing Chatrapati Shivaji Maharaj Shetkari Sanman Yojana (CSMSSY) or the farm loan waiver is under active disbursal and expected to cover close to 40 lakh farmers in the State at ₹1.5 lakh per farmer and entails a burden of ₹30,000 crore on the State Budget.
The fresh plans of depositing ₹5,000 directly into the individual accounts of farmers every month would similarly require a further financing of around ₹15,000 crore more. It will be up to the farmer to decide on how to spend the bonus subsidy — either for the sowing season that will commence soon, or for personal use.
The Additional Chief Secretary of Finance in Maharashtra, U.P.S Madan said, “I have no details of the scheme which is being directly handled by the State Agriculture Department.” He, however, said that the State may require to borrow in order to finance it, considering the expenditure already budgeted for the farm loan waiver, the VII Pay Commission payouts in incremental salaries and pensions for State employees as well as the recently declared drought relief program, which will require ₹20,000 crore. The sum may increase as more regions in the State are being declared drought hit.
Mr. Madan said, “It is a cause for worry as it would impact our deficit adversely. Even though our borrowings are well under control and we have the liberty of borrowing up to ₹60,000 crore more, even while remaining under the prescribed limit of 25% of the Gross State Domestic Product (GSDP), we would not like to indulge in it. Maharashtra’s total debt to its GSDP that stood at 29% of its GSDP in 2003-2004 is down to 16.4% of its current GSDP, although we are permitted a consolidated debt burden of up to 25% of the GSDP. Instead, we will focus on tightening our belts on expenditure during the rest of the year so funds are available for the new subsidy.”
This means expenditure cuts for the rest of the year and budgeted funds for priority spending will have to be diverted to meet the financing of the bonus subsidy. Mr. Madan agreed that a part of the financing may still have to be arranged through borrowings in addition to expenditure rationalization.
The State had repaid a high cost debt to the extent of ₹11, 000 crore that bore a high coupon rate at an interest of 9.5%, 10% and 10.5%, and was negotiating with other lenders for writing off other such high cost debts, which was met with reluctance from financing institutions keen to continue the loan portfolios till the full tenure of the term loans.
