The Union Ministry for Food and Public Distribution has expressed its inability to consider Punjab’s plea to “restructure” the Rs 31,000-crore loan against outstanding Cash Credit Limit liabilities for procurement of food grains for Centre.
The Punjab government had hoped to get the loan “readjusted”. But Union Minister for Food and Public Distribution Ram Vilas Paswan wrote a letter to Punjab Chief Minister Amarinder Singh on August 14 telling him that this cannot be done.
Punjab had requested that the loan burden should be shared equally by the state, Centre and the consortium of SBI-led banks that advance CCL limit for foodgrain procurement. It had also sought that the rate of interest should be reduced.
The Union Minister, in his letter, has stated that “the liabilities were fully settled after extensive deliberation of all stakeholders including the Government of Punjab and after obtaining Cabinet approval.”
In March 2017, just before the Congress government came to power in the state, the outgoing SAD-BJP government had agreed in deliberations with the Centre that Punjab owed an outstanding of Rs 12,000 crore till the 2014-15 crop season.
It had agreed to the Centre’s offer that this outstanding amount would be treated as a loan, and that the interest on this principal would be Rs 19,000 crore. The long term loan was to be repaid over a period of 20 years.
Paswan’s letter stated that the loan was not even counted in the fiscal deficit limit of three per cent of the GSDP.
The letter refers to a meeting with all stakeholders in February this year and states that the ministry took views of the Consortium of Banks over the issue.
Paswan said as per Department of Financial Services, the rates of interest offered are the most competitive, keeping in view that the loan is to be repaid in 20 years, and the rate of interest is fixed. Further the rate of interest is subject to review only after five years.
It also states that any action on lenders resulting into modification of terms of advance will attract the provisions contained in the RBI circular on restructuring of advances and lenders will have to reclassify the facilities as non-performing.
Moreover, writing off of any amount due to lenders will tantamount to classifying the state government as defaulters, which will alter operations of food credit accounts of state, the letter adds.
The state government, that pays an instalment of Rs 3250 crore every year has been seeking that the liability should be shared equally between the state, the Centre and the consortium of banks as Punjab procures grains for the central pool.
After the two-page letter, the Chief Minister met Paswan, Finance Minister Arun Jaitley and Prime Minister Narendra Modi over the issue at the end of August. Jaitley had then suggested a meeting with Punjab Finance Minister Manpreet Singh Badal, who met him in Delhi on Monday.
Badal met the Chief Minister at the latter’s residence in Chandigarh on Tuesday and is learnt to have briefed him about the developments.
Sources said that Jaitley has called the FM to Delhi again in a few days.