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Loan waiver to meet NDA's unpaid distress bill: PM
March 05, 2008 13:52 IST
Mounting a scathing attack on the Bharatiya Janata Party, Prime Minister Manmohan Singh [Images] on Wednesday said that the government's historic initiative to waive farmers' loans on an unprecedented scale was to meet the 'unpaid distress bill' left behind by the erstwhile National Democratic Alliance government.
"Doubts have been raised about the resources required for this write-off," he said, responding to the discussion on the Motion of Thanks to the President's Address to the joint session of Parliament.
Several members, including Leader of Opposition L K Advani, had asked the government from where it would provide Rs 60,000 crore towards waiver of bank loans of small and marginal farmers.
"Let me remind the Leader of the Opposition that what we have done is nothing more than picking up the unpaid distress bill which the NDA government left behind," Singh said.
Singh said it was the distress of farmers that brought the Congress-led United Progressive Alliance to office.
"This distress is a legacy of the NDA rule - a rule during which policies were anti-farmer, anti-agriculture. Low Minimum Support Prices impoverished our farmers. They needed a fresh flow of credit. The tripling of agriculture credit flow by us did not address the problem of past debt," he said.
Singh said the debt relief announced by the government is an attempt to finally remove the "burden of the NDA period from our farmers' shoulders. We are determined to end agricultural distress".
The Prime Minister, who was repeatedly interrupted by the opposition BJP, asserted, "We will not stop till we have wiped the tears from the eyes of all farmers".
"That is why our government took the historic initiative to waive farmers' loans on an unprecedented scale. A debt relief scheme of this magnitude has never been conceived or attempted before", Singh said.
"If bankruptcy is a permissible form of business outcome in industry, what is irrational about this waiver?" he asked.
"It will allow a fresh flow of institutional credit to farmers. It will clean up banks' balance sheets. It will stimulate economic activity in rural areas," Dr Singh said.
Singh said that the debt relief of Rs 60,000 crore covers all scheduled commercial banks, regional rural banks and cooperative banks.
"It covers both production and direct investment. It is not just about non-performing assets, it is also about overdues. And it will benefit about four crore farmers."
He assured the House that the debt relief would be a simple exercise and it will be completed by June end. "It will not be a long drawn affair," he said, seeking to allay apprehensions by members that complicated procedures may come in the way of relief reaching them.
Sharing the concern of members over many farmers being in the clutches of money lenders, the Prime Minister said for those who are outside the pale of institutional credit and cannot benefit from the waiver, a special programme has been started.
This programme of financial inclusion is to ensure that each and every farmer has a bank account and is able to access institutional credit. It has achieved a degree of success in some districts.
"We hope to see the same results across the country. States have to work hard to ensure that financial inclusion becomes a reality," Dr Singh told the Parliament.
Singh said the sheer size of the gesture showed the government's commitment to farmers and determination to improve their lot and see agriculture restored to its rightful place in the Indian economy.
Referring to doubts raised by members, he said the relief package would be well funded. "Whereas farmers will see the benefits of the relief package immediately, banks will be compensated as and when the loans become due. The details are being worked out. I believe that the dues to the banks - including production and investment credit - will materialise over three-four years," he said.
The government will make adequate provisions from tax and non-tax revenues over this period to fund this package. "Let there be no doubt that the banking system will not be constrained in any manner and there will be no contraction in liquidity," he said, adding, "We should not grudge farmers their due."