Govt yet to decide on borrowing for drought relief

Finance Secretary Ashok Chawla said today it was difficult as of now to gauge the impact of weak rains on the economy, and whether the government would need to borrow more than scheduled in the current financial year to mitigate the impact of a drought in many parts of the country.

“It would be difficult to say if the borrowing would be higher because of weak monsoons. All I can say is that we will have adequate resources to tackle the drought. We always generate adequate resources for important objectives,” Chawla said.

The government’s gross borrowing target for 2009-10 (April-March) is a record Rs 4.5 lakh crore, while it has pegged fiscal deficit at 6.8 per cent of the gross domestic product (GDP).

Chawla said the government was also banking on higher revenue collection to fund drought relief measures in the country. “The finance minister has earlier today asked for higher tax collection. We are looking to raise Rs 30,000 crore extra via direct taxes this year,” he said. Chawla said Cabinet Secretary K M Chadrasekhar had met chief secretaries of states to discuss the impact of the drought.

“The states are assessing the impact of drought. Their report will come in two to three weeks. The fund requirement will depend on their assessment of the drought,” he said.

Many states, including Himachal Pradesh, Uttarakhand, Assam, Andhra Pradesh, Uttar Pradesh, Maharashtra, Chhattisgarh, Jharkhand and Bihar have already declared drought in some districts or the entire state. During June 1-August 5, rains were deficient by 25 per cent and reported scanty-to-deficient in 25 of 36 meteorological sub-divisions.