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Saturday, April 17, 2021

Maharashtra budget: Interest-free loan announced for farmers

Under this scheme, farmers will be allowed to borrow upto Rs 3 lakh without having to pay any interest upon timely repayment. The interest burden will be borne by the state government.

Written by Zeeshan Shaikh | Mumbai |
Updated: March 9, 2021 2:45:13 am
Indian FarmerAn Indian Farmer

With the agriculture and allied sector expected to post a stellar 11.7 per cent growth in 2020-21 when the overall state GDP contracted 8 per cent, the Maharashtra government Monday announced an interest free loan scheme for its farmers as a gesture of gratitude for softening the blow on the state economy.

Under this scheme, farmers will be allowed to borrow upto Rs 3 lakh without having to pay any interest upon timely repayment. The interest burden will be borne by the state government.

“Paying interest on crop loans was often a problem for farmers. At a time when the industry and services sectors showed negative growth, agriculture and allied sectors grew by 11.7 per cent. In adverse situation, agriculture has helped the state’s economy to recover. It is imperative that we show our gratitude to farmers,” state Finance Minister Ajit Pawar said in his budget speech.

In 2020-21, the Maharashtra government had disbursed crop loans of Rs 42,433 crore. The new scheme, that will kick off on April 1, is expected to benefit over 35 lakh farmers and is estimated to cost the state exchequer around Rs 1,200 crore.

The interest waiver scheme was one component of the Maharashtra Vikas Aghadi’s Rs 4.84 lakh crore spending plan for the state which also includes a Rs 7,500 crore plan to upgrade health institutions across the state.

“A project costing about Rs 7,500 crore has been prepared to provide quality health care and treatment to the people by constructing and upgrading health institutions under the Public Health Department and it will be completed in the next four years. The proposal includes construction of district hospital, psychiatric, trauma care center, primary health center and sub-center, upgrading and construction of taluka level hospital,” Pawar said.

The widening deficit in the state’s income and expenditure projections, is also putting a squeeze on its capital expenditure. For 2021-22, the government has set aside Rs 58,748 crore for capital works, which is only 12.14 per cent of the total spend estimates.

By March end this year, the revenue deficit is projected to reach Rs 46,178 crore, making it the highest ever deficit in the state’s history. In 2018-19, Maharashtra had recorded a revenue surplus of Rs 11,975 crore.

While the Centre’s 14th Finance Commission norms require states to maintain a revenue surplus position, the new coalition government has projected a deficit of Rs 10,226 crore even in 2020-21.

The impact of the lockdown has shrunk its income too, with revenue target for the current year being scaled down sharply from Rs 3.47 lakh crore to Rs 2.89 lakh crore. Its revenue expenditure target was also brought down from Rs 3.57 lakh crore to Rs 3.36 crore. For the coming year, Pawar has forecast the revenue expenditure to grow to Rs 3.79 lakh crore.

To shore up the state’s finances, Pawar has decided to increase VAT on liquor from the existing 60 per cent to 65 per cent. It has also decided to classify country liquor into two separate categories as branded and non-branded country liquor, while increasing State Excise Duty to 220 per cent of manufacturing cost or Rs 187 per proof litre whichever is high on branded country liquor. This estimated to get additional revenue of Rs 1,800 crore.

It has also proposed a one percent concession in Stamp Duty over the prevailing rate exclusively to women, provided the transfer of house property or registration of sale deed is in their name.

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