The Hindu Business Line : PM defends farm loan waiver

The Prime Minister, Dr Manmohan Singh, stoutly defended the Budget proposal to provide loan waiver to four core farmers, stating that “what we have done is nothing more than picking up the unpaid distress bills which the NDA Government had left behind”.

Winding up the discussion on the motion of thanks on the President’s address in the Lok Sabha, the Prime Minister asserted that “it is an income transfer on an unparalleled scale. If bankruptcy is a permissible form of business outcome in industry, what is irrational about this waiver? It will allow a fresh flow of institutional credit to farmers. It will clean up banker’s balance sheets; it will stimulate the economic activities all over India and I do not make any apology”.

Compensation

Stating that the debt relief would be a simple exercise to be complete by June, 2008, the Prime Minister said that while the four-crore farmers would see the benefits of the relief package immediately, banks would be compensated as and when the loans become due. Dr Singh said the details were being worked out and hoped that the dues to the banks including production and investment credits would materialise over a span of three to four years.

Responding to the critics from the Opposition as to where the money would come for the agrarian bailout package, the Prime Minister said that “we will make adequate provision from tax and non-tax revenues over this period to fund this package. Let there be no doubt the banking system will not be constrained in any manner and there will be no contraction in liquidity”.

Reeling out statistics to highlight the NDA government’s abject failure on the farm front, Dr Singh charged that “those who neglected the welfare of farmers, depressed the minimum support prices and the term for trade agriculture, those who exported our food surplus at a loss, have no right to advocating welfare of the farmers”.

He said the previous NDA government raised the minimum support price of wheat by Rs 50 in years tad, a small incremental rate of Rs 10 which over a span of five years was 8.6 per cent; the UPA Government in the last four years raised the MSP for wheat by Rs 370, a rise of 56 per cent. The gross capital formation in agriculture as a proportion of GDP has improved by the UPA Government from a low of 10.2 per cent in 2003-04 to 12.5 per cent in the year 2006-07. After many years, the agricultural growth touched almost four per cent last year.

Price stability

Stating that his government was committed to maintaining reasonable price stability despite an adverse global milieu, Dr Singh recalled that his government has not changed in the last four years the prices payable under the public distribution system. Despite rising costs, “we have not changed the prices payable by our farmers for fertilisers and also cited the case of stable kerosene price despite more than the tripling of petroleum product prices.

Nuclear pact

Referring to the civil nuclear energy cooperation with the US and other countries, he said India continues to make efforts to realise this in a manner in which “we can maximise the use of nuclear energy for peaceful purposes. We are currently engaged in negotiations with the International Atomic Energy Agency for an India-specific safeguards agreement” and promised the broadest possible consensus within the country to enable the next step to be taken”.

In response to the criticism that the government remains directionless, the Prime Minister said “it is in the direction of inclusive growth, it is in the direction of empowering the poor and marginalised sections. It is in the direction of unleashing the enterprise and creativity that is inherent in every citizen”.

In his remarks frequently interrupted by Opposition members, the Prime Minister also touched upon internal security, and welfare schemes to minorities and India’s policy towards its neighbours.

Later, the House passed the motion of thanks on the President address to the joint session after putting all the amendments that were negatived. Both the BJP and the supporting party CPI-M staged a walkout after the Prime Minster’s reply, expressing dissatisfaction over his remarks.