Spending, borrowing to be within target: Govt

The government said on Tuesday there was no plan to waive loans given to farmers in the face of poor monsoons and any spending to mitigate the effects of drought would be within the Budget target.

Monsoon rains have been 29 per cent below average so far this year, which has pushed up food prices, hit rural incomes and threatened to hurt economic growth.

Finance Minister Pranab Mukherjee said he expected economic growth at more than 6 per cent in 2009-10, which would be the slowest pace of expansion in seven years.

However, the government is yet to assess the impact of erratic rains on the economy and on farmers, and plan panel deputy chief Montek Singh Ahluwalia said growth projections could be trimmed due to the deficient rains.

Last year, the government spent close to Rs 70,000 crore for waiving farm loans after a rise in suicides of distressed farmers whose crop failed.

Asked if there is any plan for a fresh debt waiver scheme for farmers whose crops are likely to fail this year, Mukherjee said, “There is no such proposals.” He was speaking to reporters after holding a review meeting of regional rural banks (RRBs).

Regional rural banks
On the financial strength of RRBs Mukherjee said, the government has already completed the Rs 1,700-crore capital infusion programme for RRBs and the requirement of fresh flow of funds would be determined by the committee.

A top Nabard official, who attended meeting, said there were 22 RRBs which might still need additional capital. The perception is that their existing capital base is not adequate to expand lending activity.

In an effort to deal with adverse effects of delayed monsoon, RRBs have been asked to have relook at business plans to support areas that have been hit hard, official added.