The Hindu Business Line : Budget illusions

By writing off a massive Rs 60,000 crore of farmers’ loans the Finance Minister may have sent a popular message but has really set a bad precedent. Honest farmers who were diligent enough to pay back their loans in time under very difficult circumstances will feel foolish and cheated. They could also have waited or defaulted to reap the benefits now promised.

Writing off of loans, for whatever reason, is bad in principle and a breach of trust and contract. This loan waiver also amounts to “robbing Peter to pay Paul”, in that the amount is going to come from the kitty of honest tax-payers.

And if farm loans can be written off, then why not consider entrepreneurs who boldly set up small manufacturing or business ventures, whetted by institutions which offered loans as capital, and failed? They should also be protected under an amnesty system.

Thus the loan waiver is otherwise a clear signal for an early general election. The Congress party, the main constituent of the ruling coalition, is buffeted by pushes and pulls by its allies, including the Left. Unable to go forward, the party may think this is the right time to get a fresh mandate from the people. The general public will certainly see through the ploy.

K. Venkataraman Mumbai

Largely positive

Budget 2008-09 has given primacy to agriculture, apart from focussing on education and health care. Stepping up of gross capital formation in agriculture to 16 per cent by the end of the Eleventh Plan period, higher investments in irrigation and larger investment in education and health care will go a long way in expanding capabilities so necessary for inclusive growth.

The Rs 60,000-crore loan waiver scheme, in spite of its adverse impact on loan repayment culture, will help eliminate the desperation of highly indebted farmers and will surely go some way in spurring them to greater effort in producing the increasing quantities of food. Such a one-time spur is a pressing need for food security.

K. K. Ammannaya Udupi

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