EC blocks study loan interest waiver plan

Tags: News

FM had flagged scheme in letter to voters

EC blocks study loan interest waiver plan
The election commission has asked the government to keep in abeyance a scheme offering moratorium on payment of interest on education loans until the national elections get over in mid-May.

This marked a fresh setback to the UPA's attempt to cash in on its social schemes to garner votes.

Finance minister P Chidambaram had announced the moratorium in the interim budget on February 17. The scheme was to benefit nine lakh students at a cost of Rs 2,600 crore to the exchequer.

The election commission's directive followed newspaper reports that Chidambaram had written letters to the beneficiaries of the scheme in Tamil Nadu's Sivaganga constituency, where his son Karti Chidambaram is contesting election as a Congress candidate.

Chidambaram represented the southern Tamil Nadu constituency seven times, including in the outgoing 15th Lok Sabha.

In his letter, the finance minister reportedly appealed to the beneficiaries to vote for his son, reminding them that it was he (Chidambaram) who brought the scheme. The letter is said to be dated March 16, 2014.

Between 2004 and 2013, banks disbursed education loans worth Rs 900 crore in Sivaganga to about 50,000 students. Public sector banks had Rs 57,700 crore outstanding amount in education lo­ans as of December 2013 in the country with 25.70 lakh students benefiting from the scheme.

In his letter, Chidam­baram claimed that the first thing that struck him after taking charge as finance minister was to provide education loans to students from the disadvantaged sections without any collateral.

"Whenever I sanctio­ned education loans to students, I would ask th­em about their father's income. Their answers moved me. Hence from 2009,

I also announced waiver of interest on the loans till the students completed their college education,” the letter said.

The election commission is understood to have told finance ministry that the interest waiver scheme can be implemented only after the election process gets over and that no publicity of the scheme should be done during the election process.

Earlier, the election panel had stopped notification of a new gas price that was supposed to come into effect from April 1, saying it could be implemented by the new government.

However, the panel allowed the Reserve Bank of India to announce new bank licences.

Chidambaram has been a proactive member of Parliament. In the four

years since 2009, he visited Sivaganga 95 times. The town has around 200 bank branches.

Of the Rs 75,000 crore farm loans waived during the United Progressive Alliance government, Sivaganga accounted for Rs 70 crore with 35,000 beneficiary families.

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