Letters to the editor dated September 07, 2021

| Updated on September 07, 2021

Capital formation

This refers to ‘The importance of animal spirits’ (September 7). A healthy fixed capital formation rate revolves around a robust increase in both public and private investments. The Covid pandemic has led to diversion of funds by the government more towards containing the epidemic rather than concentrating on increasing the capex. This has pushed India’s debt-GDP ratio to 88 per cent in FY 21 against the target of 40 per cent set as per the FRBM Act for 2024-25.

Increased diversion of funds towards freebies by States keeping an eye on elections is one of the prime reasons for dwindling capital expenditure and for debt levels turning precarious.

In spite of the RBI infusing liquidity into the banking system, lack of credit offtake along with increase in NPAs has contributed to the economy decelerating during the pandemic year. Fiscal measures in terms of rationalising the taxation policy will put more money in the hands of the public, leading to increase in private investments.

Srinivasan Velamur


Database on farmers

This refers to ‘Focus on creating farmer database; allow linkages to land records, Tomar tells States’ (September 7). Though delayed, this is a much-needed exercise. If government benefits are to reach the small and marginal farmers, who account for around 80 per cent of the total farmers, having a database becomes crucial.

In the absence of discrete details, the benefits may not reach the needy. Although there are several schemes in force for farmers’ welfare, linking the details on land holdings, crop pattern, irrigation methods, manuring system, power usage, labour employed, quantum of harvest, etc., will give stimulus to the administration to devise more beneficial schemes.

Rajiv Magal

Halekere Village, Karnataka

Broadband usage

This pertains to ‘Right line’ (September 7). Since the usage of smart gadgets depends on a robust internet network, the government must look to further incentivise the telecom sector.

The broadband connections in rural areas are still in a nascent stage and the available networks are not faultless.

Stimulating people to utilise technology sans preparing them to use the devices will not enable them to utilise broadband facilities for their day-to-day requirements.

The literacy level in general and tech literacy, in particular, of the vulnerable sections in backward areas need to drastically improve to enhance the use of broadband services.

VSK Pillai

Changanacherry, Kerala

Govt expenditure

This refers to ‘Govt’s likely belt tightening leaves experts worried’ (September 7). Revival of the pandemic-hit economy must be the main objective of the government, rather than expenditure control and reducing the fiscal deficit.

At this juncture of scanty private investments, government spending will be a big demand booster. Hence, the government must shun belt tightening at this stage. In the upcoming Budget, reducing allocations may not help in reining in the fiscal deficit.

NR Nagarajan

Sivakasi, TN

Foreclosure charges

The RBI, in an RTI response dated September 3, 2009, said it does not approve of the policy of foreclosure charges on pre-payment of loans, but kept short of issuing any directives. However, foreclosure charges subsequently were abolished in a phased manner starting from the RBI notification of June 5, 2012, for home-loans, and two notifications in this regard issued on August 2, 2019, where pre-payment of all types of loans except business loans.

With the current economic slowdown, business activities have fallen drastically and most businessmen are under pressure to repay loans and would prefer to get rid of the loans by arranging funds by selling assets or otherwise. Many NBFCs levy abnormally high foreclosure charges, often as high as 5 per cent plus GST.

The RBI should abolish foreclosure charges on business loans and loans with fixed interest rate.

Madhu Agrawal


Published on September 07, 2021

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