The Finance department is faced with a herculean task of mobilising huge funds required for crop loan waiver up to ₹2 lakh for all eligible farmers across the State.
With Chief Minister A. Revanth Reddy directing the officials to prepare a comprehensive road map for crop loan waiver, a promise made by the Congress in the run up to the Assembly elections, the Finance department officials embarked on the methodology that should be adopted to raise resources for fulfilling the same. The Chief Minister during a review meeting on Monday was particular that the promise should be delivered by August 15.
The State government is incurring huge expenditure on account of spree of welfare schemes as well as commitments like interest payment, salaries/wages and pensions. It has been depending on the financial accommodation instruments provided by the Reserve Bank of India like special drawing facility, ways and means advances and overdraft to meet the committed expenditure. According to RBI figures, the State depended on special drawing facility for 30 days and ways and means advances for 29 days in March indicating the difficult financial situation it is faced with.
Implementation of crop loan waiver will sure be a challenging task for the government given the financial constraints it has been facing. “We are trying our level best,” was how a senior Finance official responded when whether the department can fulfil the task given the short timeline set for it. The response comes at a time when the department is still to arrive at the exact quantum of money that will be required for covering all eligible farmers under the loan waiver scheme. “We are waiting for information to come from bankers,” the official said.
Coupled with the constraints it has been facing for mobilising the required resources, the State is faced with restrictions imposed on the off-budget borrowings by the Central government. The Union government has decided to treat the States’ off-budget borrowings as their own borrowings, to be adjusted against their net borrowing ceiling. With the concerns expressed by different State governments, the Centre had decided to include off-budget borrowings in NBCs from 2021-22 and adjust it across fiscal 2022-23 to 2025-26.
Though this eased the retrospective burden, the States are reportedly landed in a piquant situation since they will have lesser borrowing space going forward as their off-budget borrowings would also form part of the net borrowing ceiling.
The State government has raised ₹8,000 crore market borrowings during the first two months of the current financial year leaving scope for raising another ₹8,000 crore before this month end, according to the indicative calender of borrowings submitted to the RBI. Doubts are however being raised on whether the space for borrowings would be enough to fulfil the commitment along with meeting its other commitments simultaneously.
