Centre waives repayment of Rs 85 bn loan to Punjab

In a landmark decision, Prime Minister Inder Kumar Gujral has ordered that repayment of a special Rs 85 billion loan given to Punjab be waived.

Gujral made this announcement after a one-and-a-half hour meeting with Punjab Chief Minister Parkash Singh Badal, who had demanded that the repayment of the loan given to Punjab should be waived as the state had spent the money to fight terrorism.

While announcing the decision, Gujral said Punjab had waged a war against terrorism to protect the nation's integrity and sovereignty.

The prime minister said the recovery of the loan given to Punjab would stop with immediate effect, according to a spokesman for the Punjab government.

The prime minister, the spokesman said, had also ordered that the necessary modalities for executing the decision be worked out by central government officials.

The chief minister hailed Gujral's decision and described it as a ''historic statesman-like gesture'' to the people of Punjab.

This is the second time that the Centre has had waived the repayment of a special loan given to Punjab to assist the state in fighting terrorism. Then prime minister P V Narasimha Rao had earlier waived the repayment of a Rs 8 billion loan following persuasion by then chief minister Beant Singh.

The Punjab government spokesman said the prime minister announced that the state would not have to pay back this loan under any circumstances.

Gujral said the state had borne the brunt of the proxy war against the country which was indebted to the people of Punjab. The prime minister had invited the Punjab chief minister to Delhi during his recent visit to the state.

Punjab government officials, who accompanied Badal, were in a jubilant mood following Gujral's decision.

Previous chief ministers, including Rajinder Kaur Bhattal, had tried to persuade the Centre to waive off the loan.

The Punjab government spokesman said that Amritsar airport would shortly be declared an international airport and there would be direct flights from Amritsar to London and Birmingham.

Gujral also informed Badal that Rs 1.05 billion would be sanctioned by the Centre for upgrading the airport, including increasing the length of the runway, and setting up of immigration and customs departments. An air cargo complex, the prime minister said, would also be set up at Amritsar to help exporters in the state.

Earlier, at the meeting on Friday evening, Badal told Gujral that burdening the state with the Rs 85 billion debt for a proxy war fought by it against Pakistan would amount to weakening India's strongest defence bulwark.

Punjab, Badal said, is the outer-most defence post of the country and has therefore been always targeted by the enemy. Therefore, there was a need not only to preserve its strength but to consolidate and further strengthen its infrastructure against foreign aggression .

Badal pointed out that Article 355 of the Constitution clearly states that protection against separatist forces is primarily the responsibility of the Government of India . ''This entire loan should be waived off so that it could not effect our state's annual plans and the massive development activity undertaken by the present government,'' he said.