FM seeks Rs 10,000 cr for farm loan waiver

Parliament's approval for additional net cash spending of Rs 43,060 crore sought.

The government today sought Parliament's approval for additional net cash spending of nearly Rs 43,060 crore for 2007-08. This includes Rs 10,000 crore for creating a Farmers Debt Relief Fund for waiving the debt of small farmers.

The expenditure outgo is part of the third and final batch of supplementary demands of grants for the current fiscal that was tabled in the Lok Sabha today by Finance Minister P Chidambaram.

This is the first time the government has budgeted for the Rs 60,000-crore farm debt waiver and relief scheme, which was announced in this year's Budget.

The government has sought approval for gross additional expenditure of nearly Rs 1,40,379 crore, of which proposals involving net cash outgo aggregate to nearly Rs 43,060 crore. 
 

FM MAANGE MORE Additional cash outgo (major items only)
Farmers' debt relief fund	10,000.00
Interest payments  (market loans and MSS etc.)	8,476.20
Social & Infrastructure Development	5,923.00
Food subsidy	5,823.90
Fertiliser subsidy	3,836.70
Transfers to stateS & UTs	2,740.00
(All figures in Rs/cr, for fiscal 2007-08)

The remaining amount of nearly Rs 97,318 crore will come from the savings of the ministries. Of the cash outgo, as much 87 per cent (nearly Rs 37,479 crore) is non-Plan expenditure.

However, barring the Rs 10,000 crore on account of the farm debt waiver, the expenditure has already been provided for in the revised estimates for 2007-08.

In response to a question over the impact of the farm debt provision on the fiscal deficit, a senior finance ministry official said: "The additional expenditure of Rs 10,000 crore has already been anticipated and will be met through an increase in revenue collections. It will not impact the deficit figures for the current fiscal".

Given that the gross domestic product (GDP) for 2007-08 is projected at Rs 46,33,967 crore, the additional expenditure on account of the farm debt waiver is expected to add 0.2 per cent of GDP to the fiscal deficit for the year.

The central government has estimated a fiscal deficit of 3.1 per cent of GDP for 2007-08 and a revenue deficit of 1.4 per cent.

The debt relief fund has been created for payment to financial institutions like scheduled commercial banks, regional rural banks and cooperative credit institutions for all farm loans disbursed till March 31, 2007, which were overdue as on December 31, 2007, and remained unpaid till February 29 this year.

The government has said it will waive all loans of small and marginal farmers by the end of June, and will also offer a one-time settlement scheme for big farmers.