Ruling out Central funding for any state’s farm loan waiver, Finance Minister Arun Jaitley on Tuesday said that the government has to meet its fiscal deficit target.
“We have got Fiscal Responsibility and Budget Management (FRBM) Act and fiscal deficit target, we intend adhering to it,” the Finance Minister told reporters here during a press briefing when asked about the farmers’ agitation demanding farm loan waiver in various states.
The FRBM committee has set a 3.2 per cent fiscal deficit target for the current year.
Jaitley’s response comes a day after Punjab announced farm loan waiver following Uttar Pradesh and Maharashtra.
Madhya Pradesh has been witnessing widespread protests by farmers demanding loan waiver and remunerative prices for their produce. The number of farmer suicides in the state has gone up to 10. On June 6, five farmers were killed in police firing while another died of his injuries later in Mandsaur district.
Jaitley had earlier said that the states which want to go for these kinds of schemes will have to generate them from their own resources.
Raising its concern on state governments waiving off farm loans, the Reserve Bank of India (RBI) had earlier said that such actions increase the risk of slippages and contribute to inflation sooner or later.
Unless there is existing fiscal space in the state budgets, the states should avoid going down the “slippery path” of farm loan waivers, RBI Governor Urjit Patel had said, adding that it can erode the fiscal gains made over the previous 2-3 years.