Farm loan waiver: Maharashtra mulls hiking non-tax revenue -Governance Now

Farm loan waiver: Maharashtra mulls hiking non-tax revenue

Maharashtra’s overall debt is likely to balloon to Rs 4.40 lakh crore

Geetanjali Minhas | June 14, 2017 | New Delhi

#fiscal deficit #land monetisation #non tax revenue #farm loan waiver #Sudhir Mungantiwar #7the pay commission #Maharashtra #metro

Maharashtra finance minister Sudhir Mungantiwar

The Maharashtra government’s decision to waive its farmers loans is estimated to set back the state government by Rs30,000-Rs32,000 crore. The state’s overall debt is likely to balloon from an estimated Rs 4.13 lakh crore to Rs 4.40 lakh crore. Its fiscal deficit will also increase from the estimated 1.53% of the Gross Domestic Product (GDP).

Speaking to Governance Now, finance minister Sudhir Mungantiwar said: “Our main concern is poor farmers who are dependent on farming only and not able to repay the loans. The employment rate in agriculture sector in Maharashtra is more than 50%. Out of the 4.55 crore people employed in Maharashtra, 2.5 crore people work in agriculture sector. Farming is an important part of economics.”

When asked how the government will arrange funds for loan waiver, Mungantiwar said: “We will now have to take a fast decision on arranging funds for farm loan waiver. Just as the government has been arranging funds for 7th Pay Commission, Metro and Navi Mumbai Airport, in the same manner, funds for farm loan waiver will be arranged. The government income from non- tax revenues will have to increase and land will have to be developed and monetised.”

“With growth rate of 14% in Maharashtra this year, our revenue has been Rs 4000 crore and we can increase our non- tax revenue. Even if we increase our growth rate by 2%, it will increase GST by Rs 40,000-45,000 crore. We are now working on a policy so that farmers can sustain themselves and increase their contribution to GST.”

He said that three committees have been formed by the government. “One will study the design of farm loan waivers by other states, second will decide the scope of loan. The third panel constitutes the ministerial group headed by revenue minister, Chandrakant Dada Patil includes Shiv Sena leader and transport minister, Diwakar Roate, cooperatives minister, Subhash Deshmukh, irrigation minister, Girish Mahajan and agriculture minister, Pandurang Fundkar. They will negotiate and liaison with farmers and give its findings by July 25.”

Vishwas Utagi, convenor, Trade Unions Joint Action Committee (Maharashtra), said that with Maharashtra government having committed to waive- off farm loans, this will have ramifications all over the country. This issue will have to be discussed in assembly to get financial approval and this could escalate fiscal deficit.

“Now the government cannot back out of this.”

He added: ‘‘Besides crop loans, there are outstanding loans to many other agricultural sectors and the issue has to be decided by the government and farmers together. Once the government comes out with the data as promised, our real story will start. It is the issue of agrarian crisis.”

Utagi went on to say that that due to continuous drought over the last 3-4 years, the agriculture sector all over the country is severely affected and demonetization robbed people of their cash. “The agriculture sector was very badly hit and is boiling. Three lakh industries were also badly hit.’

Raghunath Dada Patil, member, Swabhimani Shetkari Sanghtana, said that the Maharashtra government is denying the right price for produce. “When farmers are getting good price for their produce overseas, the government has banned exports. It imported onions from Pakistan and China at Rs 48 per kg and pulses from Mozambique and Malawi at Rs 135 per kg when we are not even getting Rs 50 here. Under the Essential Commodities Act 1955, if export ban is removed there is no need for us to ask for loan waiver. The government is compelling us to commit suicide.”

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