A large majority of them was unanimous on the point that the move would set a bad precedent for those farmers who had been faithful in repayment of bank loans and could adversely trigger a tendency to duck regular loan payments in future.
“In the backdrop of an effort to boost the agri-economy, the move, may, on the surface level, appear to have a very good effect, specially when one ponders over the spate of suicide by farmers in various parts of the country,” said Abhiroop Sarkar, senior professor of Economics in the Indian Statistical Institute here. “Can the government afford to tackle the adverse effects the move could trigger in future?” he asked.
Industrialist Harsh Neotia who welcomed the tax breaks to facilitate circulation of disposable income in the market, wondered about the ‘loyalty’ of those farmers who, despite all difficulty, paid up the loan installments. “I feel this aspect of inequity was not taken into account and the announcement may spur non-compliance of commitment in future among many farmers who could have otherwise paid up their installments,” Mr Neotia observed.
According to Mihir Gupta, senior professor of Economics in Calcutta University, the non-provisioning of Rs 60,000 crore sought to be waived off in the 2008-09 budget is a disturbing trend.
Long-term solution
“Over the years, farmers have either been committing suicides or getting bogged down in debt traps following failure of crop or other natural disasters. Just waiving off loan for one year is no solution to end their miser,” he added.
The government must come out with a long-term programme. It might trigger a race among many to fudge land documents to avail the benefit,” he pointed out.
With the lightening of the NPA (non-performing asset) burden ,the banks would be able to produce better results and the profit level could go up, argued P Sadashiv, a tax consultant. He, however, too felt that the finance minister ought to come out with some measures to counter the adverse trends in the banking sector, which the move might spell.
