The Hindu Business Line : Write off Central loans, urge Southern CMs

The Chief Minister of Karnataka, Mr N. Dharam Singh (second from left) greeting the Planning Commission Deputy Chairman, Dr Montek Singh Ahluwalia, at the Southern Chief Ministers Conference on the mid-term appraisal of the Tenth Five Year Plan in Bangalore on Wednesday. Also seen are (from left) the Chief Minister of Andhra Pradesh, Dr Y.S. Rajasekhara Reddy, the Chief Minister of Kerala, Mr Oommen Chandy, and the Chief Minister of Maharashtra, Mr Vilasrao Deshmukh. - G.R.N. Somashekar

Bangalore , Nov. 17

THREE southern States have sought the Planning Commission's intervention in writing off Central loans for achieving fiscal correction.

The three States were Karnataka, Kerala and Andhra Pradesh, represented by the respective Chief Ministers, Mr Dharam Singh, Mr Oomen Chandy and Dr Rajasekhara Reddy, have indicated that unless this was done, it was difficult for the States to achieve fiscal correction. Karnataka has a debt burden of Rs 9,800 crore to the Centre.

Kerala has about Rs 5,000 crore and Andhra Pradesh has an outstanding in excess of Rs 10,000 crore to the Centre. The representation was made at the meeting of the Planning Commission for a mid-term appraisal of the Tenth Plan here today.

The States, have pointed out that the high interest rates on the loans, of about 13 per cent per annum were one of the major factors that was adding stress to their respective finances and leading to low capital expenditure in their respective States.

In addition, the States have also sought the intervention of the Planning Commission for prepayment of some of loans to the financial institutions, which include the National Cooperative Development Corporation, HUDCO, LIC and the GIC.

Some of the loans, the States said, were at rates as high as 16 per cent, which was contributing severe fiscal stress, they said. Besides, some of the States have also sought greater allocation of funds for development of infrastructure especially for irrigation.

The Andhra Pradesh Finance Minister, Mr K. Rosiah, who spoke to the media said that the States also urged reduction in the farm lending rates, to help bring down the debt burden on the farmers. Farmers in the States of Andhra Pradesh and Karnataka have resorted to suicides as a result of the drought and the consequent inability to repay their loans to the creditor institutions.