Farm loan waiver: No easy options for UP govt

New bonds, spreading the burden on govt's books and going the UDAY way are possibilities: Experts

On Tuesday, the Yogi Adityanath government in Uttar Pradesh announced waiver of farm loans of Rs 36,359 crore. But with the state’s fiscal deficit already at 4.45 per cent (Rs 55,020 crore) of its gross state domestic product in FY17 (revised estimates), the question is how will it raise the money to pay off banks? 

Various options have been proposed. 

A possible way out of this quagmire, one with limited impact on the state’s fiscal deficit, would be for the Uttar Pradesh government to direct a state entity to issue bonds. The proceeds from this can be used to pay