Income support schemes, farm loan waivers will cause fiscal slippages: RBI

The Reserve Bank of India on Wednesday told the 15th Finance Commission that income support schemes and farm loan waivers will cause fiscal slippages in the states. Members of the Finance Commission on Wednesday met RBI Governor Shaktikanta Das and deputy governors.

“Fiscal deficit of states is budgeted to be lower in 2019-’20 budget estimates, but revised estimates and actuals deviate significantly,” a government press release said, adding that outstanding debt as a percentage of gross domestic product has been rising.
Das also raised the matter of setting up state finance commissions, public sector borrowings and the continuity of the finance commission, the press release said. It said that such continuity was necessary due to the fiscal management requirements of the states.
In its presentation, the RBI also spoke about cash management, pointing out that states need to improve their capabilities of forecasting their cash needs. The Finance Commission headed by NK Singh met senior economists on Wednesday, ahead of a meeting with bankers.
BJP-ruled states have and the centre have announced sops for farmers to relieve agrarian distress. On the other hand, Congress governments which came to power in Rajasthan, Madhya Pradesh and Chhattisgarh have partially waived farm loans.
In its 1 February budget, the centre had promised that small farmers would get Rs6,000 per year in their bank accounts in three equal installments. Beneficiaries will get the amount from 1 December 2018, retrospectively.
The Congress, on the other hand, has announced that it will launch the Nyuntam Aay Yojana if it comes to power following the Lok Sabha elections. According to the scheme, the poorest 20 per cent of families will get Rs72,000 per year deposited in their bank accounts.