New Delhi: To save on interest cost, the government is likely to release in a couple of months Rs5,000 crore to banks as reimbursement for their farm debt waiver.
“The Finance Ministry is considering to release Rs5,000 crore to lending institutions to avoid escalation in interest payment,” a source said.
This amount would bring down the outstanding principal, sources said, adding that the remaining Rs10,000 crore would be released later during the fiscal.
As per the 2009-10 interim Budget, the government announced paying Rs15,000 crore during the current fiscal year to banks and financial institutions.
According to the Cabinet decision last year, the government decided to pay interest amounting to Rs3,872 crore on the second, third and fourth instalments of reimbursable claims of the lending institutions pertaining to the scheme.
Last fiscal, the government reimbursed Rs25,000 crore as the first instalment to lending institutions under the Agricultural Debt Waiver and Debt Relief Scheme.
The scheme for farmers, announced in the 2008-09 Budget, was implemented by 30 June 2008.