jaipur

Updated: Dec 19, 2018 12:11 IST

The Congress promise of waiving farm loan waiver could cost the exchequer about Rs 70,000 crore in Rajasthan, the state finance department has estimated.

Congress president Rahul Gandhi had promised that farm loans will be waived within 10 days of coming to power in the election-bound states. Of the three states Congress won, Madhya Pradesh and Chhattisgarh have already announced the waiver of short term loans.

In Rajasthan, the newly formed government headed by Ashok Gehlot is still discussing the waiver with the finance department presenting different scenarios.

According to a finance department official, the complete waiver is likely to cost Rs 70,000 crore, of which Rs 50,000 crore are short-term loans (for one year or less). The official added that Rs 20,000 crore is due on state cooperative banks while the remaining on nationalised banks.

“We have the data from different departments. We are preparing a proposal on loan waiver for the government to consider after speaking to Madhya Pradesh officials regarding the same,” said the official cited above, not willing to be identified.

Department of economics, University of Rajasthan, head and associate professor SS Somra said it’s a big amount and will not be beneficial step for the common men – it would be 47% of the total budget, that is Rs 99,000 crore. This type of loan waiving process are not productive activities for the economy – in long term will leave negative impact.

“These are political decisions but not in the country’s interest in the long run,” he said.

Vasundhara Raje government had earlier this year waived farm loans of up to Rs 50,000 from the state cooperative banks which benefitted around three million farmers and cost Rs 8,400 crore to the state exchequer.

“The understanding with the cooperative banks was that the amount will be settled in instalments in four years. The government had just Rs 2,000 crore to provide,” the financial official said, adding that a short term capital was taken from National Cooperatives Development Corporation.

The official added there is very little scope for the government to borrow from the market because in the present budget, it had a borrowing capacity of Rs 36,000 crore, of which a loan of about Rs 25,000 crore has already been taken.

The official said to waive the entire farm loan, the government will have to make a provision in the budget.

BJP spokesperson Mukesh Pareek said, “Now that they (Congress) have promised the people, they should deliver.”

The financial condition of Rajasthan is much more precarious than MP and Chhattisgarh with its fiscal deficit being 3.5% of the Gross Domestic Product (GDP) for financial year 2018-19 as compared to 3.1% in 2014-15.