Ab taiyari karo budget mein | SSC GD course par 25% off! | Use Coupon Code: SASTAHAFTA

Political ploys initially hailed as master- strokes often end up as flops. The Rs. 60,000 crore farm loan waiver announced in the budget writes off I 00% of overdues of small and marginal farrmers holding upto two hectars, and 25% of overdues of larger farmers. While India has enjoyed 8%-9% GDP growth for the past few years, the boom has bypassed many rural areas and farmer distress and suicides have made newspaper headlines. Various attempts to provide: relief (employment guarantee scheme, public distribution system ) have made little impact, thanks to huge leakages systems. So, many economists think the loan waiver is a wothwhile alternative to provide relief. However the poorest rural folk are Iandless labourers who get neither farm banks, and depend entirely no moneylendersm and will not benefit. Besides, rural India is full of the family holdings rather than individual holdings and family holdings will typically be much larger than two hectares even for dirt-poor farmers, who will therefore be denied the 100% waiver. It will thus fail in both economic and political objectives. IRDP loans to the rural poor in the 1980s demonstrated that crookes bank officials demand bribes mounting to one third the intended benefits. Very few of the intended beneficiaries who merited relief received it. After the last farm loan waiver will similarly slow down fresh loans to d serving farmers. While overdues to co-operatives may be higher, economist Snrjit Bhalla says less than 5% of farmers. If so, then the 95% who have repaid loans will not benefit. They will be angry at being penalised for honesty. The budget thus grossly overestimates the number of beneficiaries. It also understimates the negative effects of the waiver encouraging wilful default in the future and discouraging fresh bank lending for some years. Instead of trying to reach the needy, through a plethora fo leaky schemes we should transfer cash directly to the needy using new technology like biomatric smart cards, which are now being used in many countries and mobile phones bank accounts. Then benefits can go directly to phone accounts operable only by those wirh biometric cards, ending the massive leakages of current schemes. The political benefits of the loan waiver have also been exaggerated since if only a small fraction of farm families benefit, and many of these have to pay bribes to get the actual benefit, will the waiver really be a massive vote-winner ? Members of joint families will feel aggrieved that , despite haveing less than one hectare per quality for the 100% waiver. All finance ministers, of central or state governments, give away freebies in their last budgets, hoping to win electoral regards. Yet, four - fifth of all incumbent governments is voted out. This shows that pattern. What was the outcome of IRDP loans to the rural poor?

Political ploys initially hailed as master- strokes often end up as flops. The Rs. 60,000 crore farm loan waiver announced in the budget writes off I 00% of overdues of small and marginal farrmers holding upto two hectars, and 25% of overdues of larger farmers. While India has enjoyed 8%-9% GDP growth for the past few years, the boom has bypassed many rural areas and farmer distress and suicides have made newspaper headlines. Various attempts to provide: relief (employment guarantee scheme, public distribution system ) have made little impact, thanks to huge leakages systems. So, many economists think the loan waiver is a wothwhile alternative to provide relief. However the poorest rural folk are Iandless labourers who get neither farm banks, and depend entirely no moneylendersm and will not benefit. Besides, rural India is full of the family holdings rather than individual holdings and family holdings will typically be much larger than two hectares even for dirt-poor farmers, who will therefore be denied the 100% waiver. It will thus fail in both economic and political objectives. IRDP loans to the rural poor in the 1980s demonstrated that crookes bank officials demand bribes mounting to one third the intended benefits. Very few of the intended beneficiaries who merited relief received it. After the last farm loan waiver will similarly slow down fresh loans to d serving farmers. While overdues to co-operatives may be higher, economist Snrjit Bhalla says less than 5% of farmers. If so, then the 95% who have repaid loans will not benefit. They will be angry at being penalised for honesty. The budget thus grossly overestimates the number of beneficiaries. It also understimates the negative effects of the waiver encouraging wilful default in the future and discouraging fresh bank lending for some years. Instead of trying to reach the needy, through a plethora fo leaky schemes we should transfer cash directly to the needy using new technology like biomatric smart cards, which are now being used in many countries and mobile phones bank accounts. Then benefits can go directly to phone accounts operable only by those wirh biometric cards, ending the massive leakages of current schemes. The political benefits of the loan waiver have also been exaggerated since if only a small fraction of farm families benefit, and many of these have to pay bribes to get the actual benefit, will the waiver really be a massive vote-winner ? Members of joint families will feel aggrieved that , despite haveing less than one hectare per quality for the 100% waiver. All finance ministers, of central or state governments, give away freebies in their last budgets, hoping to win electoral regards. Yet, four - fifth of all incumbent governments is voted out. This shows that pattern. What impact will be loan waiver have on banks ?

Political ploys initially hailed as master-strokes often end up as flops. The Rs 60 000 crore farm loan waiver announced in the budget writes off 100% of overdues of small and Marginal farmers holding upto two hectares, and 25% of overdues oflarger farmers. While India has enjoyed 8%-9% GDP growth for the past few years, the boom has bypassed many rural areas and farmer distress and suicides have made newspaper headlines. Various attempts to provide relief (employment guarantee scheme, public distribution system) have made little impact, thanks to huge leakages from the government's lousy delivery systems. So, many economists think the loan waiver is a worthwhile alternative to provide relief. However the poorest rural folk are lan_dless labourers who get neither farm loans nor waivers. Half of the small and arginal farmers get no loans from banks, and depend entirely on moneylenders, and will not benefit. Besides, rural India is full of the family holdings rather than individual holdings and family holdings will typically be much larger than two hectares even for dirt-poor farmers, who will, therefore, be denied the 100% waiver. It will thus fail in both economic and political objectives. IRDP loans to the rural poor in the 1880s demonstrated that crooked bank officials demand bribes amounting to one third the intended benefits . Very few of the intended beneficiaries who merited relief received it. After the last farm loan waiver will similarly slow down fresh loans to deserving farmers. While overdues to co-operatives may be higher, economist Snrjit Bhalla says less than 5% of farmer loans to banks are overdue ie.overdues exist for only 2.25 million out of 90 million fanners. If so, then the 9 5% who have repaid loans will not benefit. They will be angry at being penalised for honesty. The budget thus grossly overestimates the number of beneficiaries. It also underestimates the negative effects of the waiver encouraging wilful default in the future and discouraging fresh bank lending for some years. Instead of trying to reach the needy, through a plethora of leaky schemes we should transfer cash directly to the needy using new technology like biometric smart cards, which are now being used in many countries, and mobile phones bank accounts. Then benefits can go directly to phone accounts operable only by those with biometric cards, ending the massive leakages of current schemes. The political benefits of the loan waiver have also been exaggerated since ifonly a small fraction of farm families benefit, and many of these heve to pay bribes to get the actual bene~t, will the waiver really be a massive vote-winner? Members of joint families wall feel aggrieved that, despite having less than one hectare per head, their family holding is too large to qualify for the 100% waiver. All finance ministers, of central or state governments, give away freebies in their last budgets, hoping to win electoral regards. Yet, four-fifth ofall incumbent governments are voted out. This shows that beneficiaries of favours are not notably gratdt1I, while those not so favoured may feel aggrieved, and vote for the opposition. That seems to be why election budgets constantly fail to win elections in India and the loan waiver will not change that pattern. Why do economists feel that loan waivers will benefit farmers in distress?

Political ploys initially hailed as master-strokes often end up as flops. The Rs 60 000 crore farm loan waiver announced in the budget writes off 100% of overdues of small and Marginal farmers holding upto two hectares, and 25% of overdues oflarger farmers. While India has enjoyed 8%-9% GDP growth for the past few years, the boom has bypassed many rural areas and farmer distress and suicides have made newspaper headlines. Various attempts to provide relief (employment guarantee scheme, public distribution system) have made little impact, thanks to huge leakages from the government's lousy delivery systems. So, many economists think the loan waiver is a worthwhile alternative to provide relief. However the poorest rural folk are lan_dless labourers who get neither farm loans nor waivers. Half of the small and arginal farmers get no loans from banks, and depend entirely on moneylenders, and will not benefit. Besides, rural India is full of the family holdings rather than individual holdings and family holdings will typically be much larger than two hectares even for dirt-poor farmers, who will, therefore, be denied the 100% waiver. It will thus fail in both economic and political objectives. IRDP loans to the rural poor in the 1880s demonstrated that crooked bank officials demand bribes amounting to one third the intended benefits . Very few of the intended beneficiaries who merited relief received it. After the last farm loan waiver will similarly slow down fresh loans to deserving farmers. While overdues to co-operatives may be higher, economist Snrjit Bhalla says less than 5% of farmer loans to banks are overdue ie.overdues exist for only 2.25 million out of 90 million fanners. If so, then the 9 5% who have repaid loans will not benefit. They will be angry at being penalised for honesty. The budget thus grossly overestimates the number of beneficiaries. It also underestimates the negative effects of the waiver encouraging wilful default in the future and discouraging fresh bank lending for some years. Instead of trying to reach the needy, through a plethora of leaky schemes we should transfer cash directly to the needy using new technology like biometric smart cards, which are now being used in many countries, and mobile phones bank accounts. Then benefits can go directly to phone accounts operable only by those with biometric cards, ending the massive leakages of current schemes. The political benefits of the loan waiver have also been exaggerated since ifonly a small fraction of farm families benefit, and many of these heve to pay bribes to get the actual bene~t, will the waiver really be a massive vote-winner? Members of joint families wall feel aggrieved that, despite having less than one hectare per head, their family holding is too large to qualify for the 100% waiver. All finance ministers, of central or state governments, give away freebies in their last budgets, hoping to win electoral regards. Yet, four-fifth ofall incumbent governments are voted out. This shows that beneficiaries of favours are not notably gratdt1I, while those not so favoured may feel aggrieved, and vote for the opposition. That seems to be why election budgets constantly fail to win elections in India and the loan waiver will not change that pattern. What message will the loan waiver send to farmers who have repaid loans?