New Delhi: The government said on Tuesday there was no plan to waive off loans given to farmers in the face of poor monsoon and any spending to mitigate the effects of drought would be within the budget target.
Monsoon rains have been 29% below average so far this year, which has pushed up food prices, hit rural incomes and threatens to hurt economic growth.
Union finance minister Pranab Mukherjee said he expected economic growth at more than 6% in 2009-10, which would be the slowest pace of expansion in seven years.
However, the government is yet to assess the impact of erratic rains on the economy and on farmers, and plan panel deputy chief Montek Singh Ahluwalia said growth projections could be trimmed due to the deficient rains.
Last year, the government spent close to Rs70,000 crore ($14.4 billion) for waiving farm loans after a rise in suicides of distressed farmers whose crop failed.
Asked if there is any plan for a fresh debt waiver scheme for farmers whose crops are likely to fail this year, Mukherjee told reporters after a conference: “There is no such proposals.”
Separately, finance secretary Ashok Chawla said there was no need to borrow more than the record budget target of Rs4.51 trillion ($93 billion) in the 2009-10, even after meeting expenses for drought relief.
“We don’t need to borrow more, we will get more by way of taxes,” he said.
“If necessary we will try to adjust from within the existing budget. Already direct taxes target has been raised.”
Chawla also said he did not see interest rates rising in the “foreseeable” future.
The comment helped 10-year federal bond yields ease to 7.12% by 1026 GMT, off a near nine-month high of 7.16% in intra-day trade.