How UP govt financed farm loan waiver

Allocation for power sector cut by half & huge rises estimated in tax collections and central grants

When the newly elected Uttar Pradesh government announced a loan waiver for small and marginal farmers, economists wondered how a cash-short administration would fund this.

However, the state government’s recently unveiled Budget has managed to not only provide for the waiver but kept its fiscal deficit under the prescribed limit of 3 per cent of gross state domestic product. It maintains there would continue to be a revenue surplus, though this is budgeted to decline to Rs 12,279 crore in FY18, from Rs 24,506 crore in FY17. 

A closer look reveals that the government managed this by rejigging its expenditure