The Punjab Cabinet on Monday took two key decisions on funding the farm loan waiver — by pledging the Rural Development Fund (RDF) and unveiling its industrial policy under which every electricity unit would be given at Rs 5 to industry from November 1 for the next five years. With the Centre giving no hope to Punjab about easing the borrowing limit to extend farm loan waiver, the state Cabinet gave its nod to state’s Plan B to raise loan for the waiver by pledging Rural Development Fund (RDF), the Indian Express reported.
The section 7 of the Rural Development Fund Act, 1987, and sections 26 and 27 of the Punjab Agriculture Marketing Produce Act did not allow relief to the farmers and the fund could only be utilised for infrastructure. The Cabinet gave its nod to the deletion of all three sections that would allow the government to raise a loan of Rs 9,500 crore and extend it to farmers by pledging the RDF.
State Finance Minister Manpreet Singh Badal told the media persons after the Cabinet meeting that the RDF would fund the farm loan waiver. He said the industrial policy was aimed at providing a conducive environment to industry. The state will make about Rs 3,600 crore this fiscal in the RDF. As the previous government had raised a loan of Rs 10,000 crore for its urban and rural renewal missions by pledging RDF and Punjab Infrastructure Development Fund, these two funds are already lying mortgaged.
After coming to power in March, it was in June that the CM announced in the Vidhan Sabha to waive debt up to Rs 2 lakh for the nearly 10 lakh small and marginal farmers (holdings not over 5 acres), which would cost the state almost Rs 10,000 crore. From the RDF and mandi fee, the state gets Rs 3,600 crore every year. However, the state may pledge this towards repayment of a loan that may be raised, the Hindustan Times reported.
The rural development board collects RDF through 152 market committees which function under the mandi board. Market fee is collected by the market committees on behalf of the mandi board. Both these boards have high liquidity and may at the current stage have Rs 1,000 crore each in their coffers.