RBI Objects Loan Waiver Scheme

Naidu's loan waiver plan hits RBI wall-Pioneer

Andhra Pradesh Chief Minister N Chandrababu Naidu’s promise of waiving the crop loans has run into unexpected problem with the Reserve Bank of India raising objections to it and questioning the rationale behind it.

While a senior RBI official wrote a letter to the State Government opposing the idea of writing off the farmers' loans, Naidu held a meeting with the State-level bankers committee to discuss the nitty-gritties of the issue.

Waiving of the crop loans was expected to cost Rs 15,000 crore to the State exchequer. RBI Executive Director Deepali Pant Joshi has written to the Government saying the policies like waiving of loans will weaken the banking system in the country and it will be an injustice to the people who repay the loans on time.

RBI official said that it would allow waiver of loan only if the State Government makes the payment in cash and it will not accept any securities from the State Government.

The letter warned that the frequent waiver of loans will hurt the fiscal discipline of the banks. RBI’s letter prominently figured in Tuesday’s meeting, which was also attended by State Finance Minister Y Ramakrishnudu and Agriculture Minister P Pulla Rao. The State Government decided to reply to the RBI letter explaining the circumstances in which the TDP had to make the promise of writing off the loans of farmers.

Sources said that Naidu, during his visit to New Delhi, on June 25 will raise the issue with Union Finance Minister Arun Jaitely and seek his approval.

After the meeting, Pulla Rao told the media that there was no need for any apprehension among the farmers over the issue of waiver of loans as the State Government was committed to it. He said that the committee set up by the Chief Minister to go in to the issue will submit its preliminary report on June 22 and a clarity will emerge by June 30. “We will implement the scheme with the approval of the Central Government and the RBI,” he said.

“If the bankers can accept one time settlement with the industrialists why not now,” Pulla Rao wondered. Soon after he took oath as the Chief Minister Naidu had set up a committee to go in to the issue of writing off the loans. Naidu promised to waive the loan within 45 days after receiving the report.

Naidu to assume office tomorrow Meanwhile, Chandrababu Naidu will assume office on Thursday when he will set his foot in the State Secretariat after a gap of 10 years. He will take the charge in his 8th floor office in the L Block of the Secretariat amid the chanting of vedic hymns by the pundits.

Thursday will be a very hectic day for Naidu as the newly elected State Assembly will also meet on the same day at 11:52 am. Earlier in the morning Naidu will also visit his camp office at the Lake View Guest House which he will be using till his office in the Secretariat is fully furnished.

State Minister for Finance and Legislative Affairs Y Ramakrishnudu, who reviewed the security arrangements at the State Assembly with the top police officials said that the old Assembly hall allotted to Andhra Pradesh was small and had little place for visitors.
“We will not be issuing any visitors passes. We have already requested the Ministers and the MLAs not to seek the visitors passes,” he said. Even the media gallery was also small and media passes will be issued in a limited number, he said.

The AP Assembly Hall is the old building in the same premises where the new Assembly Hall allocated to Telangana is situated. The semi circular hall is a historic heritage building built as Town Hall during the Nizam era. After extensive work its original glory has been restored to a large extent.

On the first day the newly elected members will take oath and the assembly will condole the death of its members. Next day the House will elect the speaker. Senior TDP leader Kodela Sivaprasad Rao was expected to become the Speaker. On June 21 Governor ESL Narasimha will address the joint session of the Assembly and Legislative Council at 8:55 am.
Singapore to help build new capital Meanwhile Minister for Municipal Affairs and Urban Development P Narayana said that the State would take the help from Singapore in building the new capital for the State.

He was speaking after meeting the representatives of the Singapore Government. “Chief Minister Chandrababu Naidu wants the new capital to have world class facilities which can meet the requirements of next hundred years,” he said.

“The capital will be built in a manner that all the facilities are available at one place,” he said. Vijayawada, Guntur, Tirupati and Visakhapatanam will be developed as mega cities, he said.

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