Loan waiver not yet a reality for Punjab

Badal, of course, was very hopeful of the waiver since the meeting was attended by some other Punjab leaders and bureaucrats besides many secretaries to the Union Government. Significantly, Union Finance Minister P Chidambaram did not attend that meeting.

During his first visit to his home state on May 4 after becoming Prime Minister, Gujral had publicly announced at Jalandhar in the presence of Badal and other state leaders that the State shall not bear this burden in future.

According to sources, the State Government would be sure of actual waiving of the loan only after it received the minutes of the meeting. The State’s Resident Commissioner in New Delhi has been directed to follow up the case. Though Gujral has announced writing off of the debt which he said amounted to Rs 8500 crore, its burden at present is far less as Punjab repaid 20 monthly installments of Rs 85 crore each during 1994-95 and 1996-97.

This debt pertains to the snowballed special term loans to the State Government from 1984 to March 1994 to enable it to combat insurgency and militancy. The outstanding amount as on March 31, 1994 was Rs 5,522 crore.

The issue of its repayment cropped up only after the return of peace in the State. On the recommendations of Ninth Finance Commission, the Centre had provided a moratorium on repayment of this amount till 1993-94.

The first public annoucement about waiving of this huge amount was made by P V Narasimha Rao, the then Prime Minister, during his Ludhiana rally on April 20, 1995.

However, the Union Ministry of Finance, in its letter dated March 27, 1996, only waived off repayment of the special term loans and interest thereof amounting to Rs 803.23 crore during 1995-96. Intriguingly, according to Punjab records, neither Rao’s announcement nor the Ministry’s letter were later honoured by the Centre for unexplained reasons.