The Hindu Business Line : RBI supports farm loan waiver scheme

For inclusive growth: (From left) The RBI Governor, Dr Y. V. Reddy; his deputies, Dr, Rakesh Mohan and Mr V. Leeladhar, at the apex bank’s central board meeting in the Capital on Thursday. -

Our Bureau

New Delhi, March 6 Close on the heels of the Prime Minister’s defence of the farm loan waiver scheme in Parliament, the Reserve Bank of India on Thursday chipped in, extending its support and help to the Government in implementing the scheme in a manner that would strengthen the banking system rather than weaken it.

Briefing newspersons on his customary post-Budget meeting with the RBI board, the Finance Minister, Mr P. Chidambaram, said that the RBI Governor, Dr Y.V. Reddy, had conveyed to the Board that the central bank was ‘fully geared’ to help the Government implement the Rs 60,000-crore scheme. The Finance Minister welcomed this statement.

“The Government, the RBI and banks will work together in a manner that the goals and objectives of the scheme are achieved. The goals and objectives are to provide debt waiver and debt relief, and at the same time ensure that the banking system is strengthened,” Mr Chidambaram said.

The Finance Minister said that he had, at the meeting, explained the debt waiver and debt relief scheme. “Because it was a closed door meeting, I took them into confidence about the contours of the package. I recalled to them the Prime Minister’s statement yesterday in Parliament that the banking system will be compensated for the loans that are written off in a way that the banking system will not be constrained at all,” Mr Chidambaram said.

Budget philosophy

He also apprised the Board of the philosophy behind the budget — to continue the India growth story and also make it more inclusive. Mr Chidambaram said that RBI Board members were generally appreciative of the thrust of the Budget, especially the increased allocation to health and education.

“With more money in the pockets of taxpayers, more public expenditure and fiscal stimulus to manufacturing, all the three taken together should intuitively stimulate consumption, demand and growth. We are hopeful that 2008-09 would be another year of high growth,” Mr Chidambaram said.

More Stories on : RBI & Other Central Banks | Farm credit | Budget

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