The issue has been taken up with the 11th Finance Commission. The special term loan was advanced by the Centre, to the state government, to combat militancy.

The state government has requested the Finance Commission to recommend to the Centre that the repayment of remaining installments of the special term loan, amounting to Rs 3,772 crore, outstanding on March 31, 2000, and interest thereon be waived.

Out of a special term loan of Rs 5,799.92 crore received from the Centre, the installments of repayment of the principal amounting to Rs 1,256.68 crore and interest totalling to 2,156.43 crore and falling due during 1995-96 to 1999-2000, have already been waived by the Centre.

The first installment of the Rs 803.23 crore (principal Rs 176.14 crore and interest Rs 627.09 crore) was waived by the then Prime Minister P.V. Narasimha Rao. A total of Rs 3,413.11 crore, including Rs 2,156.43 crore as interest, stands waived.

The state government has also referred to the discussion between Chief Minister Parkash Singh Badal and the then Prime Minister Inder Kumar Gujral and the decision taken, to convey to the 11th Finance Commission, the need for providing debt relief to the state.

Year-wise, the state government was advanced Rs 290,25 crore in 1984-85, Rs 281.31 crore in 1985-86, Rs 349.35 crore in 1986-87, Rs 650 crore in 1987-88, Rs 730 crore in 1988-89, Rs 560.01 crore in 1989-90, Rs 800 crore in 1990-91, Rs 600 crore in 1991-92, Rs 600 crore in 1992-93 and Rs 939 crore in 1993-94. There was moratorium on the repayment of principal and interest up to 1992-93. The state government repaid Rs 2,694.67 crore (Principal Rs 771.24 crore and interest Rs 1923.43 crore) up to 1997-98.

The state government has also pleaded that the 11th Finance Commission allow consolidation and rescheduling of repayment of other central loans outstanding on March 31, 1991, over a period of 30 years and the rate of interest be lowered to reduce the fiscal deficit of the states.

In addition, 50 per cent of the principal, which is due for repayment during the period, should be written off to relieve the states of their debt burden.