According to the latest official figures from the state-level bankers’ committee (SLBC), the 35 lakh agricultural loan account holders of Gujarat owe banks a total of Rs 82,075 crore. If the state government agrees to waive farm debt, it will cost 45% of the Rs 1.83 lakh crore state budget for 2018-19. The total crop loan (one-year payment cycle) outstanding in Gujarat is Rs 45,607 crore, while the outstanding from agriculture term loans (3 to 9 years) is Rs 36,468 crore. Even if the state government agrees to waive only crop loans, the burden on the exchequer and tax payers in the state will still be huge.
A top officer in the state finance department said, “Considering the position of the state’s finances, it is not advisable to put any further burden on the exchequer. Considering the huge sum in outstanding farm loans, even a 10% waiver will work out to Rs 8,000 crore. To afford even this, the government will have to increase its revenues substantially, which is unlikely in the GST regime. To fund such a waiver, we will either have to hike taxes (which is not possible in GST, but VAT on fuel could be raised) or have to take on fresh debt. We are legally bound by the FRBM (Fiscal Responsibility and Budget Management) Act, so we cannot take on more debt to finance a farm loan waiver. Any kind of farm loan waiver will be a big burden on the exchequer.”
Y Alagh, veteran economist, chancellor of Central University of Gujarat and professor emeritus/vice-chair at the Sardar Patel Institute of Economic and Social Research said, “My advice is to sit down with Hardik and develop a package a really modern package for higher education opportunities for our youth, highly-paid skill stipends for better jobs and modern infrastructure for agriculture and rural development, so that our agriculture grows. If after a decade and a half, 40% of the SSP canals have not reached the farmer, lets finish them this year. If 10,000 young persons get the lucrative jobs that people from other states, that rank above us in universities (we are 13th: 5th richest in per capita income) get, there will be no agitation. Lets have a good plan instead of just giving industry support.”