When P Chidambaram (Union Minister of Finance, India) presented the budget for the FY-08, there was a huge uproar following the announcement of the Rs. 60,000 Crore (6*10^12!) loan waiver for farmers.
That is HUGE by any margin… through that, he would eradicate 4% of total bank loans!!!!
Some people cheered it, others cried foul. They had their reasons…
1. Most of the farmers in India have borrowed from money lenders. They do so for primarily 3 reasons…
- No banks near by.
- Money lenders are always eager to lend
- They know the money lender since ages… (humane factor, but I DO think that figures in perfectly)
2. No government can write off all the bank loans of all the farmers… so, obviously the government had to set up a criteria… The criterion was set to apply to only those farmers who have <4 Acres of land (I am not certain of this figure, will have to Xcheck.) In any case, let us consider this land ceiling for tax waiver to be y Acres, even then many farmers will feel cheated… especially when they happen to hold y.1 Acres of land!!! So many people cried…
3. Others cried, where will so much money come from… valid question… I am sure there will be a valid answer in time…
4. All this money could have better utilized to pay for seeds, buying their products at a better price, training farmers in technology, providing them amenities etc…
But I still think the government did the only right thing… when they wanted to help the farmer and are prepared to put that much money into it… then this loan waiver was the only valid way forward.
It does not take a lot of inciting to make people corrupt… especially in the bureaucratic chain in India. With so much money, by the time it filtered out to farmers, in the best case scenario, 40% of it would have been siphoned off!!! Yes, it is true… my gut feeling is, had the govt. gone ahead with providing farmers with goods worth that capital, farmers would have got 20% of what was actually offered and the number of scams in India would have grown by 400%.
By making this loan waiver not all the farmers who are the most needy will get help. Many would think it is unfair… but think of it in this way… in this loan waiver, govt interacts directly with Banks… banks have immaculate records… this is the way in which corruption could be prevented from spiraling out of control!!!
Hello there. I was sent a link to your blog by a friend a while ago. I have been reading a long for a while now. Just wanted to say HI. Thanks for putting in all the hard work.
Jennifer Lancey
Its nothing but a politically motivated move. Its not going to solve the problem of poor farmers……on the contrary in the long run it is going to be more detrimental……..This money could have been used more prudently …………and on the corruption issue……i cant understand how u manage to come up with such percentage……….i guess its ur figment of imagination………
@Jennifer : Thanks for the support… I try to blog regularly, but am unable to do so, reason 1. I am lazy 2. Work eats up my time 3. My ISP sometimes just makes me give up
@sachin : 1. It definitely is a politically motivated move (no arguments there)
2. The figures are made up (73.4% of all statistics are made up!)
3. Re-iterating on my point: For a politically motivated move, you HAVE to implement what you do, else the move backfires. right? So, look at the score card of UPA Govt’s promise of 100 days of compulsory work… good scheme, poor implementation, who is to blame?? State govt’s!!! babudom… etc etc…
Thus in my view, UPA govt learnt from their mistake, now all the onus is on the central govt and the banks… the number of middle men have been cut down drastically!!! Thus, better chance of its implementation…
Your witness…