New Delhi: Finance minister Arun Jaitley on Thursday hinted at a farm relief package for distressed farmers ahead of the pre-election interim budget he is set to present on 1 February.
“Without getting into the specifics, because that would be disclosing the mind in which we are working, (I can say that) you cannot opt to wait on some of the challenges. Therefore, obviously, there will be a necessity to address them. It has happened in the past. So we intend to work within the parameters of the conventions as they exist," Jaitley said at the CNBC-TV18 India Business Leader Awards through video conferencing from New York.
According to recent media reports, the Narendra Modi government is working on measures to provide income support and funding relief to small and marginal farmers, including the possibility of interest-free loans of up to ₹ 3 lakh. (read more)
Admitting that the farm sector has been facing challenges due to surplus production and falling prices, Jaitley said a helping hand for them should not be considered a populist move. “Markets will never understand if you act for the sake of populism. But if it’s in the larger interest because of a compelling situation that develops, that’s a logical thing that markets tend to understand," Jaitley said.
India Ratings and Research (Ind-Ra) on Thursday said it expects India’s fiscal deficit to widen by 70 basis points in the fiscal year 2019-20 if the government decides to roll out a relief package for small and marginal farmers. One basis point is one-hundredth of a percentage point.
While Jaitley did not explicitly mention an interest rate cut, he said the real rate of interest in India is the highest in the world. “You cannot have a real rate of interest in India that is higher than anywhere else in the world. I am sure now that the RBI (Reserve Bank of India) has been consulting all stakeholders, they probably have a better feel of what is the real situation of the economy," he added.
After political reversals in assembly elections in Rajasthan, Madhya Pradesh and Chhattisgarh—amid mounting farmers’ protests—the pressure is building on the ruling Bharatiya Janata Party to announce a package for the farm sector that may help it in the 2019 Lok Sabha elections due by May.