Financial Daily from THE HINDU group of publications
Tuesday, Jun 22, 2004
Package for farmers
This is with reference to the editorial, `A package for farmers'' (Business Line, June 20). The Finance Minister, Mr P. Chidambaram, deserves full credit for the swift action.
But, at the outset, the package has two built-in defects. First, the declaration of the calamity-affected areas by the State governments is not usually free from bias or political considerations.
The political parties at large do not favour the farmers' needs but they generally want to exploit their vote-bank. Second, `recasting' the debts could only bring temporary relief to the farmer.
What the Indian farmer needs today is a healing touch by way of waiver of full interest from the date of sanction and sanction of additional credit on easy terms.
The earlier one-time settlement (OTS) scheme by the RBI, that got a poor response, should be reintroduced on more liberal terms for the farm segment. Nabard should come forward to assist the government with plans to help the farmer, who is the backbone of the country.
The informal credit system prevalent in the country with a huge cost load of around 32 per cent should be broken and the banks should enter the arena with more dedication.
The Government should not feel any complacency in the matter even if an element of `populism' creeps in. A revisit to the NPA norms with regard to the farm sector in terms of the Vyas Committee recommendations would give more courage to the banks to address the real problems faced by the farmers.
The major problems facing the families of the farmers and the loss of assets due to various reasons should be dealt with on humanitarian grounds.
The present NPA norm of classifying all loans availed of by the same farmer as NPA in case even one loan turns bad, is illogical and purely anti-farmer.
C. P. Velayudhan Nair
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