The Reserve Bank of India Governor, Raghuram Rajan, has “appreciated” the initiatives of Andhra Pradesh Government, including the setting up of Farmers Empowerment Corporation (FEC), to roll out a debt relief scheme for peasants over the next five years, state Finance Minister Yanamala Ramakrishnudu said today.

The Reserve Bank Governor had an hour-long meeting with Ramakrishnudu, Parliamentarian Y S Chowdary, State Planning Board Vice-Chairman Kutumba Rao, Chief Secretary I Y R Krishna Rao and top officials of the finance and planning departments here this afternoon.

“We have explained all issues clearly to the RBI Governor and his team. We have explained the financial and social problems being faced by the state post-bifurcation. He appreciated our initiatives and assured the RBI would co-operate with the State Government,” the Finance Minister told reporters after the meeting.

He quoted Rajan to say that he was “so impressed with the programmes that the AP Government has taken up”.

Debt relief scheme

Regarding the contentious debt relief scheme for farmers on which the state government is having differences with the apex bank, the Finance Minister said the RBI Governor was “not negative” when the FEC initiative and issue of certificates to farmers was explained.

“In fact, Rajan said FEC is a best solution,” Chowdary, who is heading the Financial Management Committee, pointed out.

Debt relief scheme

Under the debt relief scheme, the State Government would pay upfront an amount of Rs 5,000 crore to banks and repay the balance farmers’ loans in the next four years at a rate of 20 per cent per annum.

Responding to the State Government’s request, Rajan said the RBI was ready to open its regional headquarters at Vijayawada, the state’s new capital, if the government allotted the required land.

Rajan also agreed to hold a meeting of the RBI’s central Board at Vijayawada on the request of the finance minister.

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