GOI rescues Punjab govt from monetary disaster on foodgrain procurement

Even because the Punjab authorities continues to combat the centre opposing reforms within the agriculture sector, the state authorities was rescued by the central govt simply earlier than the tip of the monetary 12 months 2020-21 from a disaster state of affairs within the sector. Had the central govt not intervened, the state govt in Punjab wouldn’t have been in a position to procure produces from farmers, as the complete portfolio of loans for this goal was on the verge of changing into NPA by thirty first March.
The Govt to Punjab was on the verge of changing into Non-Bankable, because the Entire Loan quantity of Rs 90000 crore in the direction of Food credit score was about to grow to be Non-Performing Asset (NPA) by the tip of the monetary 12 months. This is as a result of, State Procuring Agencies (SPA) had not repaid the loans they’ve taken from banks to obtain farm merchandise.
It could also be famous that the farmers promote their meals grains to FCI and different businesses by such SPAs. SPA makes funds to the farmers, and they’re later reimbursed by the FCI in opposition to the inventory.
To facilitate this cost to the farmers, the SPAs take loans from a consortium of banks led by State Bank of India (SBI), which is called Food Credit Consortium. For each session (Kharif and Rabi), the quantity of loans taken by the SPAs from the FCC is decided, which is called Cash Credit Limit (CCL). The CCL is fastened relying upon the funds required for estimated procurement amount in a procurement session. GoI provides consent beneath Article-293 of the Constitution for such mortgage to the State Govt. As per guidelines, this mortgage must be repaid withing 3 years, else it turns into NPA.
As the SPAs had not repaid loans amounting to ₹ 89,200 crore, this whole quantity was on the verge of changing into NPA, because the RBI had refused to increase the 3-year deadline to repay. Had this occurred, the SPAs in Punjab would have been in a position to take recent loans to obtain crops within the subsequent harvest session. The wheat procurement session is scheduled to start out on tenth April, which means it was actually an emergency state of affairs. This would have led to a disastrous state of affairs for the farmers of Punjab, because the Punjab Government and particularly the farmers of state would have plunged right into a deep monetary disaster.
To tide over the state of affairs, the state authorities had written to the Union Consumer Affairs, Food & Public Distribution ministry to elevate the inventory mendacity with the SPAs, and launch the cost in opposition to them. Responding to the request, minister Piyush Goyal assured that FCI will elevate the complete inventory of twenty-two.42 million tonnes of the meals grain out there with the state businesses since 2018-19.
According to ministry sources, the Government of India accorded an overriding precedence for evacuation of virtually total inventory of 2018-19 crop, as requested by the Punjab govt, and the proceeds launched to Punjab. Keeping in view the seriousness of the matter, the problem was reviewed on the highest degree in session with the state authorities, FCI and Railway Board and whole inventory of 2018-19 was liquidated by the tip of March, and funds launched by FCI to Punjab Government.
Thus, the well timed motion by GoI saved the mortgage account of state authorities from changing into NPA.