State is free to reimburse loan on its own, says RBI
The Telugu Desam Party’s strategy planners are faced with the herculean task of fulfilling the promise of loan waiver to farmers and self-help groups, the two promises which helped the party to propel into power after about a decade. This is the second shock for the AP Government coming in the wake of the Planning Commission rejecting special status for the State.
The Reserve Bank of India has sent a letter to the AP government opposing the proposal. The RBI said they would have no objection if the state government was willing to reimburse the entire loan dues in cash. The RBI executive director Deepali Pant Joshi in a letter to the AP government said that such schemes would set up a wrong precedent and would discourage the farmers from paying the EMIs in time.
According to conservative estimates, farm loan waiver in Seemandhra region could burden the exchequer by over Rs 50,000 crore. Coupled with waiver of loans to women help groups, the figure could be about Rs 80,000 crore.