The UPA’s whopping 60,000 crore debt waiver has come for severe criticism in the Parliament.
While the BJP’s Arun Jaitley charged the finance minister Chidambaram with fuzzy math with these remarks
?if he actually raised Rs 60,000 crore without budgetary provision “I will bow my head before him not as the greatest magician but as a great FZ+;Minister”.
BJP MP from Amritsar Navjot Sidhu had this to say
Likening the loan waiver for farmers announced in the budget as a “lollipop wrapped in paper or an analgesic tablet for a cancer patient”
Calling the write off the biggest eyewash in Independent India Sidhu had an interesting suggestion
though an expert group led by R Radhakrishna had looked into problems of agricultural indebtedness had not mooted writing off farm loans, instead recommending at least Rs 18,000 crore of noninstitutional debt entailing an over 30% interest rate should be transferred to institutional agencies
Clearly there is more than one way to address the crisis that while providing relief also upholds the fundamental dharma of borrowing and lending.
The Business Standard reports that the BJP has decided to set up a committee headed by senior leader Yashwant Sinha to study the problems faced by farmers, and to puncture, what it called, the “illusion” created by the government by announcing the package.
?
While the BJP ponders its response to the UPA’s populism, Offstumped poses the question if it will resort to more competitive populism of the giveaway kind or will it find the “Right” way to do this.
Offstumped has a few suggestions while claiming no expertise in either economics or agriculture but merely claiming basic Right Thinking Common Sense.
- Any approach to solving the crisis must be rooted in three basic principles.
- The first is that the basic dharma of borrowing/lending will be upheld and not compromised in any manner.
- The second is that Local Governance must take primary responsibility for addressing the plight of its constituents.
- The third is that Individuals must take responsibility for their actions and consequences of their actions.
- Deriving from the first principle must be some kind of Personal Bankruptcy Law that allows the farmers to be given legal and institutional protection while they remain committed to restructuring and eventually repaying debt. A key element of such protected restructuring could be what Sidhu was referring to where Institutions will buyout illegal loans owed to private money lender who have a choice of taking what they can get legally and cleaning up their act or face the rule of law including losing all all money owed and jail time.
- Deriving from the second principle could be some kind of a Local Community Debt Re-structuring Tribunal that Local Governments take responsibility for and will be held directly accountable by their constituents for. Such a Tribunal can then under ambit of the Personal Bankruptcy Law take a case by case view for each individual farmer to determine the best course of action for the Farmer to get on a path to financial viability with an eventual roadmap to paying off all debt. A centrally implemented scheme suffers from the fact that it would be a blanket giveaway which could end up rewarding the undeserving while penalizing the deserving while doing little to ensure a roadmap to financial viability. As we have seen in the Vidarbha suicides that each farmer’s situation is different and only the local government is the agency best empowered to factor in the uniqueness of each case and coming up with a local solution that works under those conditions while not compromising on any of 3 basic principles.
- Finally deriving from the 3rd principle the individual farmer must sign up and commit to a set of actions that will take him on a path to financial viability while eventually paying off all debt. These set of actions could be determined jointly by the farmer with the Local Tribunal. The Central and State Governments should commit to making the necessary legislative and Institutional changes necessary to enable the farmer and the Tribunal to be successful in not just determing what actions need to be taken but to also be successful in actually executing them within a specified timeframe. All relief should be contigent on the Farmer taking responsibility and commiting to those financially responsible actions.
The role of the Central and State Governments must be limited to providing legislative and institutional support and monitoring the Local Tribunals for their effectiveness and holding them accountable for lapses. The legislative support should include the freedom for the farmer to exit agriculture by selling their lands for any non-agricultural purposes where it makes economic sense and the freedom to sell their produce in open markets with limited or no price controls.
Such a 360 degree engagement with the Farmers by the Local Governments should be the most effective way forward on evolving solutions tailored to suit the unique needs of each farming community and individual farmer rather than a centrally implemented blanket giveaway that is high on populism and poor on delivery with no responsibility to make things different the day after the giveaway happens.
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[...] Offstumped has a few suggestions while claiming no expertise in either economics or agriculture but merely claiming basic Right Thinking Common Sense. [...]
One thing’s clear, no one can compete Congress in populism.
The multitude of UPA’s failures is amazing. This loan waiver also points at the failure of the relief package announced by the PM to Vidarbha’s farmers.
Sonia stunned BJP by asking the FM for a loan waiver to the farmers. Now BJP is criticizing it, when it too was a party to such a request. BJP would be better off staying away from populism & work towards the national interest, leave appeasement to the Congress, a clear leader at it.
Like you said in an earlier post, treat the cause, not the symptom.
“From where is P Chidambaram going to find the funds for his Rs 60,000 crore lazy largesse? This insistent query needs urgent reply.
.
“But the seemingly suave PC is in no mood to give an answer.
“On the contrary, he erupts in unseemly anger and a sense of pique whenever he is posed this question. Perhaps not many people know —— as it has been conveniently hushed up by the media —— that PC walked out of a TV interview when his interlocutor kept pressing him for an answer for the Rs.60,000 crore conundrum.
“The interview was just a few minutes old, but the Union Minister who has a short fuse under his cleverly cultivated veneer of sang froid, just blew up in the face of repeated reference to the monumental monkey on public’s shoulders — we refer of course to the Rs.60,000 waiver for farmers.
“PC not only was infuriated, but also walked out of the interview in a graceless huff. But being a powerful Minister in the Union cabinet, the Minister’s angry shenanigan was pretty much downplayed —— but it was in diverse contrast to the way a similar walkout by Narendra Modi was overplayed in the run up to the Gujarat elections. In fact some sections of the media also have it that PC threatened the TV channel to which he had granted the interview.
“The above incident proves two things: The media is biased against Modi and is trying to help out the UPA in ways that are possible but not entirely above board. The other important thing is that the Rs.60,000 crore indeed worries PC, though much as he would want to believe otherwise.
“It was one of the crassest and self-serving acts of a government out to grab a few votes on the basis of a puerile populist act. The Rs.60,000 crore is indeed a cheque written to bankroll the UPA’s attempt to comeback (stay) in power through means that are essentially dubious.
“Obviously, the UPA will not pay for the misplaced munificence. Instead, common persons like you and us will be saddled with this burden for years to come. But pray why should we do it? Can’t base political bluff be called immediately? In the circumstance, the answer to the question is a sad no. That is the way the beast of democracy is structured.
“The other fundamental problem with the waiver is that it does little to address the core issue with farming. Farmers in many areas are caught in a debt trap, having primarily borrowed from usurious moneylender. Now, Union Agriculture Minister Sharad Pawar has exhorted the farmers to not repay the lenders without licence or those who charge high rate of interest.
“He has also urged the State governments to protect farmers from these lenders. So apart from leaving the banking sector bleeding, PC’s waiver mania will hit individuals and has the potential to create violent law and order situation. ‘That is a nice mess that you have got us into, Mr PC,’ as Laurel would have told Hardy. But alas this is no laughing matter. It is a question of life and death. Of farmers and also other poor people.
“To question the logic behind the waiver is not to take an anti-farmer position. But our learned Finance Minister seems to think so.”
Source:http://newstodaynet.com/newsindex.php?id=5562%20&%20section=13
MMS answers
Loan waiver to meet NDA’s unpaid distress bill: PM
http://www.rediff.com/news/2008/mar/05loan.htm
Loan waiver to meet NDA’s unpaid distress bill: PM
It’s funny it took 4 years, and a heap of dead farmers for the PM to realize that. Besides the burden of MMS’s largesse will be bore by the next NDA government. This aint no gentleman politician, this is a cut throat congi politician speaking.
Here is my post on the subject in my blog:
http://mustardpaste.blogspot.com/2008/03/curious-ways-of-english-media-in-india.html
[...] For this moral obligation to have moral sanction, the BJP’s poverty reducing populism must be premised on this basic Dharma of Governance [...]
[...] For this moral obligation to have moral sanction, the BJP’s poverty reducing populism must be premised on this basic Dharma of Governance [...]
[...] Offstumped will leave it to policy wonks to parse through the detail here. However in terms of broad ideas that can fire the imagination of a Young India here is one that stands [...]
[...] can be multiple paths to it from vesting with the local government the responsibility to devise local solutions to local problems and looking for avenues for skill development and Enterprise harnessing local knowledge and [...]