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Maharashtra has sought higher market borrowings to help finance the loan waiver of Rs 34,000 crore, which the state recently extended to 89 lakh farmers. The state government has sought the approval of the finance ministry to raise the cap on borrowings by Rs15,000 crore and also to restructure some of its high cost borrowings of the past.
Maharashtra Finance Minister Sudhir Mungantiwar met Union Finance Minister Arun Jaitley on Wednesday to pitch for an increase in the state’s borrowing limit. If the finance ministry approves the proposal, Maharashtra’s annual open market borrowing limit will go up front Rs 35,000 now crore to Rs 50,000 crore. The state has also requested the finance ministry to help restructure some of its costly borrowings contracted at an interest rate 9.5 per cent to bring it down to 7 per cent.
Mungantiwar told The Indian Express: “I have urged the Centre to consider higher open borrowing limits by Rs 15,000 crore. This would provide us a cushion up to Rs 50,000 crore. Another aspect was on the possibility of restructuring past loans between year 2003 and 2008. It was taken at 9 to 9.5 per cent. If we can rework and bring it down to 7 per cent it would help to cope with the financial burden partly.”
Jaitley has assured the centre would look into both these aspects and assess if it is workable.
The Centre has categorically ruled out extending financial support to states, including Maharashtra, for a loan waiver.
The state has launched the process of mobilising funds working with national, commercial and district central co-operative banks to start the process of disbursements of Rs 10,000 to help farmers to start sowing of khariff crops with the state government agreeing to be the guarantor. Earlier, Fadnavis indicated that Maharashtra would adopt the Telangana model to negotiate borrowing funds from banks at lower interest rates which would be repaid in four years.
A source said: “ Our preliminary calculations show that or Rs 34,000 crore raised through banks — we would need to repay Rs 13, 000 crore every year at an interest rate not exceeding 6 to 7 per cent.”
The government resolution that was issued thus paving the way for enforcement of loan waiver has given higher priority to the women loanee while redefining the family as husband, wife and children below the age of 18 years. Another modification is to facilitate the loan waiver upto Rs 1.5 lakh to farmers who because of one time settlement with banks on their accumulated dues were excluded from the crop loan bracket. In the revised guidelines the government has recommended that eight lakh farmers if they repay their outstanding dues which work upto Rs 18 lakh crore, they could be eligible for the loan waiver.
Interestingly, the total dues (non-payment) is Rs 37,700 crore across 44 lakh farmers. This is cumulative till June 30.2016. The waiver does not allow politicians, elected members, private professionals whose income is more than Rs 3 lakhs or traders registered under shops and establishment act with annual turn over of Rs 10 lakh.