Empty coffers as Gehlot prepares his gambit

The biggest immediate challenge before the Ashok Gehlot government in Rajasthan has been overcome. The farm loan waiver has been announced. The next priority is the promised ₹3500 to each of the unemployed youth. Congress president Rahul Gandhi had promised the electorate that farm loans would be waived off within 10 days after the Congress government coming to power. That has been kept.

In fact the, farm loan waiver has become a passport to win elections and nearly all the parties in the electoral fray try and appease the farmers by promising them the same. It was the BJP that, in 2017, made farm loan waiver a potent election agenda in the 2017 Assembly elections. In Rajasthan, where the coffers are empty and the state government is under a debt trap, the Gehlot government will have to provide for ₹28000 crore to waive off farm loans. In Rajasthan, 50 lakh farmers would benefit from it.

The state-level banker’s committee that monitors loans to farmers has found out that till June 2018, the total amount of farmers’ loans stood at ₹99,000 crore. Loans disbursed by scheduled banks amounted to ₹71,907 crore. The state government will have to work out a formula to grant relief to the farmers.

The former government of Vasundhara Raje, in its 2018-2019 budget, had provided for ₹8000 crore for farmers’ benefit. The BJP had aimed at winning the hearts of the rural people through these incentives. But the 2018 Vidhan Sabha election result shows that out of the 149 predominantly rural seats, the BJP could win only 51.

According to Gautam Khandelwal, a chartered account, Bajra (millet), which grows in the state in abundance and which is consumed both in urban and rural areas and for which the minimum support price is fixed at ₹14.25 a kg, was sold in the market for as low as ₹11 per kg. The farmers in western Rajasthan borrow money from private individuals rather than banks because of the stringent due diligence process. The farmers pay up to 24% interest to procure loans from the moneylenders.

How the loan waiver scheme would work out would be known only after the finance department meets the various bank officials. The state cooperative banks, under short-term and mid-term loans, have disbursed ₹15,000 crore to the farmers, while state and private banks disbursed loans worth ₹80,000 crore. The Raje government had exhausted the overdraft limit of ₹28,000 crore by availing ₹24,557 crore, thus leaving not much of a scope there for the Gehlot government.

The provision of ₹3500 as unemployment allowance announced by the Congress in its manifesto can wait as it’s not bound by any time limit. But this itself will require about ₹17,000 crore every year.

The Gehlot government will have to present the full budget in March this year where provision for the waiver will have to be made. If the Gehlot government go for a “vote on account” by convening the Vidhan Sabha, it could at the most ask for limited funds for running its show till a full budget is passed.

But the Gehlot government would not be able to ask for funds for the farm loan waiver under the same and shall have to wait for the state budget. The state government will have to go for a full budget in March itself as after that, the moral code of conduct before the Lok Sabha election would come into force.