New Delhi, Dec. 18: With an eye on elections in a clutch of states next year, including drought-hit Rajasthan and Madhya Pradesh, Prime Minister Atal Bihari Vajpayee today announced a relief package of more than Rs 8,000 crore.
The amount has sent the finance ministry, which had bitterly opposed the move at a Cabinet meeting last month, into a tizzy.
Vajpayee also announced the waiver of interest on kharif loans as a one-time measure for this year. Earlier, the finance ministry had persuaded the Prime Minister to merely defer the interest on agricultural loans and space out recovery over several years.
The Centre has already announced an agricultural input subsidy for small and marginal farmers to the tune of Rs 1,490 crore. The Prime Minister extended this subsidy to cover all other farmers up to a ceiling of two hectares as a one-time relaxation of existing guidelines.
More funds will be available to the drought-affected states to tide over their problems.
The finance and agriculture ministries will make a joint assessment of how much is required, based on actual land-holding and cultivation patterns. This will be in addition to the Rs 555 crore already earmarked by the Centre.
The relief package for drought-hit farmers has spawned a debate with the Union Cabinet divided over whether what has been finally cleared by the Prime Minister is a relief package at all or not.
Earlier, at a Cabinet meeting in November, finance minister Jaswant Singh had criticised agriculture minister Ajit Singh’s demands.
He virtually rubbished Ajit Singh’s official note asking for waiver of interest on loans to drought-hit farmers — something the Prime Minister conceded today — rollback of fertiliser prices by 50 paise a kilo and input subsidy worth Rs 2,000 crore for drought-hit farms.
Sources said the agriculture minister was caught by surprise by Vajpayee’s statement today, which seems to have been prompted by BJP spin-doctors who argued that the move was essential for the party’s electoral game plan.
Ajit Singh had drafted the Cabinet note after an in-principle agreement on it had been worked out at informal meetings with deputy Prime Minister Lal Krishna Advani and other ministers.
But Vajpayee seems to have taken the sudden decision with virtually little consultation with his colleagues.
All this seems more surprising, as Jaswant Singh had last month managed to convince the Prime Minister with an argument based on simple home truths: that the BJP-led National Democratic Alliance government’s financial situation was far from good with debts rising and fiscal deficit still not under control.
He also implicitly invoked a letter he wrote recently to Cabinet colleagues, asking them to curb spending.
The finance minister will now have to juggle together an arithmetic, which will allow him to absorb the more than Rs 8,000-crore blow and keep the fiscal deficit within manageable limits.