Much to the discomfort of Congress government in Punjab, the Bharatiya Janta Party-led Central government holds the key to the farm-loan waiver scheme in the state.

Senior officials said unless the Centre comes forward to bail out fund strapped Punjab government, it will be difficult for the state government to fulfill its farm loan waiver promise due to its bad financial health.

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"To the most, the government can raise loan to fulfill farm loan waiver promise. But even for this, we need Centre's support," said a senior official pleading anonymity.

The chief minister (CM) Captain Amarinder had said on Tuesday that he pursuing with the Central government various initiatives to provide relief to the distressed farming community of the state.

In a letter to Union finance minister Arun Jaitley, the CM has sought a one-time exemption to the state government from the provisions of the Fiscal Responsibility and Budget Management  (FRBM) Act 2003,  that restrict its borrowings to a maximum of 3 per cent gross state domestic product (GSDP), which comes to Rs 12,819 Crore.

The CM said he had sought permission from the Centre to allow the state government to raise additional borrowings of Rs 10,000 Crore  from financial institutions to help mitigate the financial distress of the farmers.
The state government had decided to provide an institutional loan waiver up to Rs Two lakh to marginal and small farmers, the CM said. Through this debt relief, the state was proposing to give relief to around 10.25 lakh farmers and the relief package would amount to about Rs.10,000 Crore, he said.

Besides this, a delegation led by state finance minister Manpreet Singh Badal had also met deputy governor, Reserve Bank of India (RBI) as well as chairman, National Bank for Agriculture and Rural Development (NABARD) on  26 and 27 July.

Though the RBI had said the state would have to arrange funds from its own resources for the proposed debt relief scheme, given the constraint of resources, it would not be possible to extend this support to farmers from the state’s own resources despite efforts to mobilise additional resources and reduce its revenue expenditure, said Captain Amarinder.