Punjab defaults on repayment of loan it took to roll out farm loan waiver

Out of the total amount, Rs 4,600 crore was doled out as farm loan waiver to peasants, Rs 511 crore to landless labourers, and the remaining money was spent on village roads. The state government has to pay an annual instalment of Rs 900 crore against the loan.

With the Centre withholding the RDF for last four procurement seasons, the state has suffered a financial blow of Rs 2880 crore.

“We paid Rs 300 crore from the MDF as the government had money in that account. But we were unable to pay Rs 600 crore that was to be paid from the RDF. Now, we have requested the bank to charge us the interim interest on the default. When we get the money, we will pay the instalment. The bank has allowed us to pay the interim interest,” said a functionary of the government.

The Mandi Board, which manages the funds and was instrumental in raising the loan during Amarinder’s government, had written to the finance department seeking funds for repayment. This was done well in advance, over a month ago before the last date of repayment. But the Finance Department too was not able to arrange the funds, sources said.

The Mandi Board has again written to the finance department about not being able to pay the instalment. “The department will now pay the instalment whenever they can arrange money,” said an official.

Chief Minister Bhagwant Mann has already met Union Minister Piyush Goyal over non payment of dues towards RDF. But the meetings have been unfruitful. Even after CM’s recent meeting, Goyal had written a letter to the state asking it to reduce the percentage of levies (RDF and MDF).

“We will take up the matter again with the Centre. If state is procuring wheat, it can have its own levies. Moreover, Haryana is also charging 5 per cent of these levies. We will see if we can think of reducing RDF by one per cent but it is too soon to say anything,” a functionary said.

Punjab charges 3 per cent MDF and RDF each on procurement of wheat and paddy. The Centre has recently asked the state to reduce it by 2 per cent each. The state would lose Rs 2400 crore by doing so.