Loan waiver to farmers will push Maharashtra's fiscal deficit

CM Fadnavis has indicated possibility of waiver for Rs 30,000 cr of dues in this category of farmers

A farm loan waiver by the government of Maharashtra would have a substantial effect on its finances.

India Ratings says a waiver of the Rs 30,000 crore owed by small and marginal farmers would push up the government's fiscal deficit by 2.7 per cent in 2017-18, from the budgeted 1.53 per cent of gross state domestic product (GSDP). To manage this, it might have to cut on capital expenditure, their report added.

"The debt/GSDP will rise to 17.44 per cent against the budgeted 16.26 per cent in FY18. The impact will depend on whether the entire loan waiver is absorbed in FY18