Govt not considering fresh farm loan waiver scheme: Pranab

As a fourth of the country reels under drought, the UPA government today said it has no proposal to write off loans taken by farmers as it did in 2008 in its first term in office. 

"There is no such proposal," Finance Minister Pranab Mukherjee said when asked if the government was considering a fresh debt waiver scheme to give relief to farmers.     

The UPA government had last year announced a nearly Rs 71,000 crore farm loan waiver scheme to offer relief to farmers, especially the small and medium ones who were unable to access fresh loans due to non-payment of dues.     

 

Noting that the full impact of failure of monsoon was yet to be assessed, the minister said the country would, however, be able to achieve six per cent plus economic growth during the current fiscal.     

Agriculture accounts for a fifth of India's GDP, but poor monsoon, besides eroding farm output, could also have a telling effect on consumer spending in rural areas.     

Economic growth decelerated to 6.7 per cent in FY'09 from nine per cent in the previous fiscal, mainly due to the global financial meltdown. Drought is expected to compound the woes.     

Mukherjee, who earlier inaugurated a conference of the heads of Regional Rural Banks (RRBs), said that a committee would be formed to assess capital requirements of the RRBs.     

Some RRBs, he added, would need capital infusion to achieve the capital adequacy requirement of 7 per cent.

The government, Mukherjee said, 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. Most of the RRBs, the Minister said, were profitable.     

As regards failure of monsoon, Mukherjee yesterday told a conference of Chief Ministers that drought has set in and the group of ministers (GoM) would meet on regular basis to review the situation and take measures to mitigate its impact.     
RBI Deputy Governor K C Chakarbarty, who was present at the conference of heads of RRBs, told the reporters that erratic monsoon would impact the prices of essential commodities. "The expectation is that the erratic monsoon may put pressure on inflation," he said.     

When asked whether farm loans would be rescheduled because of the uncertain monsoon this year, he said it was an issue for next year.     

According to reports, rainfall in the country between June 1 and August 12 has been 29 per cent below normal.     

Deficient rainfall has led to a reduction in Kharif sowing, fueling fears of high food prices in the coming months.     
However, inflation for the week ended August 1 dipped to 1.74 per cent, the lowest in three decades, even as prices of essential food items like pulses, cereals, and fruit and vegetables continued to rise.