Government may give some package to farmers but at the cost of development projects?
New Delhi, Dec 29: To make the condition of farmers better in the country the Congress has decided for loan waiver where it has formed the government and to counter their move politically, the government at the Centre too is mooting very seriously some financial assistance to them but any such move may cause burden on the coffer.
When the government is not finding goods and services tax (GST) collection satisfactory and below expectation, in such a situation arranging money to give a big package to farmers is quite challenging for the government. Rating agencies feel that any such measure will not only destroy financial structure of the country but also halt the development activities.
A report on fiscal deficit released by the finance ministry does not tell very encouraging story in this regard. The government has fixed fiscal deficit at 3.3 per cent (Rs 6.24 lakh crore) for the 2018-19 financial year but the situation from April to November has been at Rs 7.16 lakh crore which is 118 per cent of the target.
In such a situation, the government will be able to bear the burden of loan waiver to farmers only if there is an unprecedented increase in revenue and austerity measures is taken in every ministry. Actually the government expenditure is pre-decided on pension, salary, interest payment and other expenditures for running the government. So for waiving loan of farmers, development projects will have to take a back seat.
The government has fixed revenue collection for this fiscal at Rs 14.8 lakh crore but in the past seven months it has been at just Rs 7.31 lakh crore. The government was expecting an average Rs 1.12 lakh crore GST collection per month while data for 2018 suggest average collection has been at Rs 97 thousand crore. On an average Rs 15 thousand less tax collection means Rs 1.80 lakh less for the year if things don't improve.
Sources said that whatever announcement is made by the government, the big part of the money will have to arranged in this financial only. How big the burden will be, it depends of the package and its structure. Looking at the situation of coffer, it is very difficult to waive agriculture in one go. This will give the burden of Rs 3.25 lakh crore to the government coffer. The other option is adopting the Telengana model of package by providing a certain amount of money per acre for which the government will have to manage Rs 2.50 lakh crore in four years.
This can be managed on yearly basis and the government may get some relief after Bimal Jalan report comes that may allow government getting more share from the RBI reserve. This may give government some relief.