Mah to seek Centre's direction to RBI for permission to borrow

Days after it announced a farm loan waiver scheme, the Maharashtra government today said it would urge the Centre to direct the RBI to allow it to borrow a loan of Rs 34,000 crore from nationalised banks.

Maharashtra Finance Minister Sudhir Mungantiwar, who is likely to meet Union minister Arun Jaitley in Delhi tomorrow, said he would urge the latter to direct the Reserve Bank of India (RBI) to approve borrowing of loan of Rs 34,000 crore to the state.

"I will also urge the union minister to instruct the central bank to allow the state to repay the loans in instalments of Rs 10,000 crore every year," he said.
 

The BJP-led state government on Saturday unveiled a Rs 34,022 crore farm loan waiver scheme, under which debts of up to Rs 1.5 lakh each will be written off, making 40 lakh farmers debt-free.

According to Mungantiwar, Maharashtra can repay Rs 10,000 crore every year to the banks as capital and interest amount. The interest of the loan borrowed is expected to be in the range of 6.5 to 7 per cent.

"Maharashtra can borrow loan up to 22.07 per cent against the state's Gross Domestic Product (GDP). The state has borrowed up to the limit of 15.05 per cent, which means we can further borrow about 7 per cent," said Mungantiwar.

Elaborating on how the state will overcome the fiscal deficit due to the loan waiver, the minister said, "We have two-three ways to increase the state's income. We can save up to Rs 5,000 crore through fiscal discipline and up to Rs 10,000 to 15,000 crore by cutting budgetary provisions to various departments and can increase non-tax revenue by Rs 10,000 crore, which is likely to reach up to Rs 25,000 crore."

The state will also receive 14 per cent share from Centre after the Goods and Services Tax (GST) is rolled out from July 1.

"Commmencing of a Non-Banking Finance Corporation (NBFC) will be the last option, which will allow the NBFC to directly control an amount worth Rs 60,000 crore of various departments," he said.