The Telegraph
Since 1st March, 1999
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Govt term for terror loan waiver

Chandigarh, Dec. 25: The Centre has asked Punjab to submit details of expenditure incurred if the state wants waiver of loans sanctioned to it to combat terrorism.

Government sources said deputy Prime Minister L.K. Advani, in reply to a letter by chief minister Amarinder Singh, has stated that the amount would be written off whenever the Punjab government provides the details of how the money was spent and under which heads.

“Our pleas to the government have fallen on deaf ears. Even after we provide the accounts of the loans, they will only be waived off after 2005 as the Eleventh Finance Commission has deferred their repayment till then,” a senior state official maintained.

Special term loans totalling Rs 5,799.92 crore were provided to Punjab from 1984-85 to 1993-94 to tackle terrorism. The loans were repayable over a period of 15 to 20 years and included moratorium on repayment of the principal and the payment of interest till 1992-93.

The repayment started from 1993-94. An amount of Rs 2,694.67 crore (principal Rs 771.24 crore and interest Rs 1,923.43 crore) was paid till 1997-98 when the Shiromoni Akali Dal-BJP government managed to convince the Centre that the state was yet to recover from a severe fiscal crunch and deferred the payment till 2005.

Recently, former Prime Minister I.K. Gujral claimed that he had waived the loans when he was in power and that Amarinder should take up the issue with the Centre.

Rebutting Gujral’s claim, Amarinder said the former Prime Minister had only waived off Rs 2,114 crore.

While Amarinder has asked Prime Minister Atal Bihari Vajpayee and Advani to waive the loans as Punjab had been fighting the nation’s war against Pakistan-sponsored terrorism, providing accounts by the state is being seen as an impossible task.

“The majority of the loans were taken when the state was under President’s rule. The finance commission knows about the expenditure incurred in 1990-91 but nothing before that,” the official said.

Incidentally, former chief minister Parkash Singh Badal had approached Advani last year to get Rs 274 crore — the sum the Punjab government owed to the Central Reserve Police Force for using its services during the terrorism era — to be waived.

Advani, however, refused to budge and instead, asked Badal to provide the accounts.

Government sources said the Centre had never intended to implement the decision taken by Gujral as is clear from the decision to refer the matter to the Eleventh Finance Commission for providing the state appropriate debt relief.

“Even after the moratorium on payment of the loan till 2005, if the Centre had any intention of waiving off the amount, it could have easily modified the finance commission’s recommendations before placing its report along with the action-taken report in Parliament which it did not do. Instead, on July 24, 2000, the Centre conveyed to the accountant general and the state government that it had been decided not to effect recovery of the further instalment and interest payment on the special term loans,” the official explained.

But by the time the Congress government took over in February this year, the damage had already been done. On the first available opportunity, Amarinder raised the issue at the National development Council meeting on December 21 and pleaded for waiver of the loans.

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