Date:18/09/2004 URL: http://www.thehindu.com/2004/09/18/stories/2004091801881200.htm

National

Interest waiver for farmers has to wait

By Mahesh Vijapurkar

MUMBAI, SEPT. 17. Though the Maharashtra Government has announced with much fanfare that it is writing off the interest on loans of the small and marginal farmers, it will come into effect only in the next financial year.

Official sources say this is because no budgetary support has been provided for it in the current fiscal.

MSEB stymied

The requirement is Rs. 345 crores but given the speed with which the decisions were taken vis-a-vis the model code of conduct that comes into force once the polls are announced, the inability to provide the funds has led to this situation.

But since it means a payment to the banks on behalf of farmers, the "delay may not negatively impact the cultivators," it is said.

Likewise, the inability to find Rs. 395 crores to pay the first quarter instalment towards the subsidy — which would make free power to farmers possible — has stymied the Maharashtra State Electricity Board (MSEB).

The Government wants it to raise it from the market; the State would back it with guarantees.

This happened soon after the Maharashtra Electricity Regulatory Commission (MERC) told the Government that it had no problem with the Government exercising its prerogative of giving subsidies as long as cash payments were made upfront to the MSEB. If that were not done, the MERC insists, the MSEB would have serious liquidity problems.

Increasing burden

The State Cabinet had decided on August 17 to provide help to the small and marginal farmers and announced that their interest burden for one season of kharif and one rabi would be waived. The Government has to make good this loss to the cooperative and commercial banks.

Then, realising the possible impact if it discriminated between the small and marginal farmers, on the one hand, and the relatively bigger agriculturists, on the other, the Cabinet took another step two days later to cover all farmers. In the first instance, the burden was Rs. 211 crores, in the second, it was Rs. 134 crores, taking it to a total of Rs. 345 crores.

Later, the Government drafted resolutions to give effect to this decision but missed doing so with regard to a similar support of Rs. 100 crores to horticulturists.

The State Election Officer has to clear this if a government resolution has to be issued.