Waiver: Banks to get Rs 60,000 crore cash in 3 years

[Ravi Chandran.K]

Seeking to take the wind out of Opposition sails, Finance Minister P
Chidambaram on Friday declared that Rs 60,000 crore (Rs 600 billion)
will be provided in cash to banks over three years to fully settle the
burden of farm loan waiver.

"I have already provided Rs 10,000 crore (Rs 100 billion) and will
provide another Rs 15,000 crore (Rs 150 billion) immediately after
June 30, 2008. Another Rs 15,000 crore will be given in 2009-10, Rs
12,000 crore (Rs 120 billion) in 2010-11 and Rs 8,000 crore (Rs 80
billion) in 2011-12," he said while replying to the debate on the
Budget in Lok Sabha.

Expressing confidence that the government would be able pay back to
the banks through budgetary provisions due to buoyancy in tax
collections, he said, "We can resort to borrowings. But it will be the
last resort."

In the third and final supplementary demands for grants this fiscal,
government has already made a provision of Rs 10,000 crore for loan
waiver, he said, adding that is 'year zero' for the loan waiver.

The finance minister said provision of loan-waiver would be fully
"front-loaded" for the cooperative and regional rural banks
considering liquidity problems faced by them.

Chidambaram's announcement is aimed at putting to rest doubts of
opposition over funding of the largest ever loan waiver announced by
the government.

With the passing of the Vote-on-Account, the Lok Sabha on Friday
completed the first phase of the budgetary exercise for 2008-09.