PM Modi’s new year sops to cost Govt ₹ 3,500 cr annually

RSTV Bureau
Prime Minister Narendra Modi gestures as he addresses the nation on the eve of New Year, in New Delhi on 31 December 2016.

Prime Minister Narendra Modi gestures as he addresses the nation on the eve of New Year, in New Delhi on 31 December 2016.

The government will have to make an additional budgetary provision of ₹ 3,500 crore to pay for the slew of welfare measures announced by Prime Minister Narendra Modi for the poor, pregnant women and farmers on the eve of the New Year.

The figure was put out in a report made by State Bank of India Research wing.

“The overall fiscal impact of all these measures announced by the PM on December 31, will be around ₹ 3,500 crore per year, which is minimal compared to the social and economic benefits,” SBI Research said in a note on Tuesday.

Modi announced a slew of schemes for multiple beneficiaries last Saturday, in a bid to soften the blow of demonetisation drive between November 8 and December 30.

In what looked like a mini-Budget speech, Modi announced interest subventions for agricultural loans, financial assistance of ₹ 6,000 for pregnant women and an increase in the number of houses being built for poor by a third, among others.

The SBI note said the interest subvention on agri loans will result in a fiscal burden of ₹ 1,300 crore, schemes for women and children will be a fiscal drag of another ₹ 1,200 crore and the benefits under the PM Awas Yojana will cost ₹ 1,000 crore to the exchequer.

Modi had announced loans of up to ₹ 9 lakh taken in the new year under two new schemes. The Pradhan Mantri Awas Yojana will receive interest subvention of 4 per cent and loan of upto ₹ 12 lakh, and will get a 3 per cent interest waiver.

For rural areas, the number of houses being built for poor will be increased by 33 per cent. In addition, another scheme is being put in place for the neo-middle and middle- class in rural areas where loans up to ₹ 2 lakh for new housing loans or extension will receive an interest subvention of 3 per cent.

Farmers will get 60 days interest waiver on crop loans taken for the Rabi sowing and those who have already paid will get back the money into their accounts to the tune of the 3 per cent interest waiver.

They will get even better access to loans from cooperative societies with the government adding ₹ 20,000 crore to the ₹ 21,000 crore fund created by Nabard last month.

(With inputs from PTI)