June 2nd, 2005
Alexandria & Roberto
Debt Relief
Forex and Internet Secrets
By Devika A Kumar
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KISAN RINMUKTI YOJNA
The proposed Kisan RinMukti Yojna aims to
provide concrete and historic relief to the Indian
farmers and win over the hearts and minds of
approximately 300 million people belonging to
the farming communities. The Indian financial
system has been living with the non-performing
assets of over 1,50,000 crores
($ 30 bn.) concerned by around 200 industrial
houses.
Government has recently provided waiver of
interests of small investors. Various state
governments have from time to time provided
limited debt relief to farmers also. There have
been demands and agitations for writing off the
loans of the farmers who are suffering on
account of various factors including weaknesses
of market, erratic prices of inputs and other
allied factors which have led to the
indebtedness and severe plight of the Indian
farmers who have been recently driven to the
point of committing suicide.
However, no serious efforts have been made at
the national level to address this issue of relief
to the farmers all across the country. If
implemented, this scheme by its wide coverage
will make the Prime Minister immortal as also
generate tremendous goodwill for the
Government of the day
Under the proposal the small and marginal
farmers will be provided complete debt relief
including principal and the interest by writing off
such loans and interests under an executive
order of the PM/Cabinet. Other categories of
farmers will be given relief by writing off their
interests whereas the principal amount can be
rescheduled for payment in suitable installments.
The write off will have no adverse effect on the
economy, as it is basically an accounting
adjustment because the said amounts are
actually lost to the Government/institutions. Just
by showing these amounts as receivables, the
institutions are getting nothing. As such their
normal functioning will not be disturbed. In fact
the exercise is primarily aimed at rectifying the
misnomers of accounting as is being practiced
today. This will also be a small amount if we
consider the tremendous revenue losses that
occur due to the fact that more than Rs.1,50,000
crores are locked up with the big industrial
houses and there is little hope of recovering the
same. On the contrary it will give tremendous
fillip to the economy by enhancing demand and
the feel good factor in the economy. The
goodwill of 300 million beneficiaries of the
proposal will also reduce social tensions
ultimately leading to better development.
In any case for adjusting the amounts on
account of this relief package under the
proposal, innovative financial instruments like
cash assistance to the apex institutions like
NABARD by the Union Cabinet can be
considered. A Kisan Rahat Nidhi (Kisan Relief
Fund) may also be started to meet such type of
exigencies in future also.
However, the underlying impetus of the exercise
remains the rectification of the accounting
procedures which are no more but misnomers in
the real situation. What we mean here is that the
total amount can be split under various heads
and the amount can be adjusted even against
future receivables of the government, if it is
noticed that complete write off the whole amount
is really going to create any problem like
inflationary pressures etc., chances of which are
the minimal as the Indian economy has matured
to a level where it can receive and survive with
such type of shocks.
There are several dimensions of the Indian
economy, which are not fully
discovered/exploited so far. In the budget for the
year 1999, the then Finance Minister adjusted
the very base of the GNP accounting thereby
showing marginal growth in the year 1998-99.
What is meant here is that the total quantum of
blocked money in the Indian economy, the total
quantum of non-monetised sectors of the
economy as also the under-priced sectors of the
economy themselves have far bigger value than
is being realized. These will provide the
necessary resilience to the economy so that no
adverse effects are felt.
The proposal requires an administrative mega
exercise, which will be centrally handled by a
team of committed officers who have their hearts
in the proposal.
Under this exercise centrally issued certificates
will be distributed to various beneficiaries stating
the amount of writing off of their loans. For this
purpose all the credit cooperative societies can
adjust their dues and the same will be written off
by the central cooperative banks and such
compiled dues of the central cooperative banks
will be written off by the NABARD and the other
organizations. The exercise will be conducted in
such a manner that not only in reality the relief is
from the Central Government/Prime Minister to
the beneficiary but in practice also it appears
like that and the lower level agencies are unable
to harass the beneficiary on any pretext. The
certificates issued by the Central Government
and bearing a photograph of the Prime Minister
will be distributed by the MPs of the ruling
combine. Wherever the MP does not belong to
the ruling combine, the same will be distributed
by the Ministers and other designated VIPs of
the Central Government.
Thus a team of committed officers should be
appointed to oversee this exercise and also to
make the banking sector more vibrant. If the
Prime Minister desires, similar relief packages
with adequate economic justification can be
extended to other weaker sections.
The proposed Kisan RinMukti Yojna aims to
provide concrete and historic relief to the Indian
farmers and win over the hearts and minds of
approximately 300 million people belonging to
the farming communities. The Indian financial
system has been living with the non-performing
assets of over 1,50,000 crores
($ 30 bn.) concerned by around 200 industrial
houses.
Government has recently provided waiver of
interests of small investors. Various state
governments have from time to time provided
limited debt relief to farmers also. There have
been demands and agitations for writing off the
loans of the farmers who are suffering on
account of various factors including weaknesses
of market, erratic prices of inputs and other
allied factors which have led to the
indebtedness and severe plight of the Indian
farmers who have been recently driven to the
point of committing suicide.
However, no serious efforts have been made at
the national level to address this issue of relief
to the farmers all across the country. If
implemented, this scheme by its wide coverage
will make the Prime Minister immortal as also
generate tremendous goodwill for the
Government of the day
Under the proposal the small and marginal
farmers will be provided complete debt relief
including principal and the interest by writing off
such loans and interests under an executive
order of the PM/Cabinet. Other categories of
farmers will be given relief by writing off their
interests whereas the principal amount can be
rescheduled for payment in suitable installments.
The write off will have no adverse effect on the
economy, as it is basically an accounting
adjustment because the said amounts are
actually lost to the Government/institutions. Just
by showing these amounts as receivables, the
institutions are getting nothing. As such their
normal functioning will not be disturbed. In fact
the exercise is primarily aimed at rectifying the
misnomers of accounting as is being practiced
today. This will also be a small amount if we
consider the tremendous revenue losses that
occur due to the fact that more than Rs.1,50,000
crores are locked up with the big industrial
houses and there is little hope of recovering the
same. On the contrary it will give tremendous
fillip to the economy by enhancing demand and
the feel good factor in the economy. The
goodwill of 300 million beneficiaries of the
proposal will also reduce social tensions
ultimately leading to better development.
In any case for adjusting the amounts on
account of this relief package under the
proposal, innovative financial instruments like
cash assistance to the apex institutions like
NABARD by the Union Cabinet can be
considered. A Kisan Rahat Nidhi (Kisan Relief
Fund) may also be started to meet such type of
exigencies in future also.
However, the underlying impetus of the exercise
remains the rectification of the accounting
procedures which are no more but misnomers in
the real situation. What we mean here is that the
total amount can be split under various heads
and the amount can be adjusted even against
future receivables of the government, if it is
noticed that complete write off the whole amount
is really going to create any problem like
inflationary pressures etc., chances of which are
the minimal as the Indian economy has matured
to a level where it can receive and survive with
such type of shocks.
There are several dimensions of the Indian
economy, which are not fully
discovered/exploited so far. In the budget for the
year 1999, the then Finance Minister adjusted
the very base of the GNP accounting thereby
showing marginal growth in the year 1998-99.
What is meant here is that the total quantum of
blocked money in the Indian economy, the total
quantum of non-monetised sectors of the
economy as also the under-priced sectors of the
economy themselves have far bigger value than
is being realized. These will provide the
necessary resilience to the economy so that no
adverse effects are felt.
The proposal requires an administrative mega
exercise, which will be centrally handled by a
team of committed officers who have their hearts
in the proposal.
Under this exercise centrally issued certificates
will be distributed to various beneficiaries stating
the amount of writing off of their loans. For this
purpose all the credit cooperative societies can
adjust their dues and the same will be written off
by the central cooperative banks and such
compiled dues of the central cooperative banks
will be written off by the NABARD and the other
organizations. The exercise will be conducted in
such a manner that not only in reality the relief is
from the Central Government/Prime Minister to
the beneficiary but in practice also it appears
like that and the lower level agencies are unable
to harass the beneficiary on any pretext. The
certificates issued by the Central Government
and bearing a photograph of the Prime Minister
will be distributed by the MPs of the ruling
combine. Wherever the MP does not belong to
the ruling combine, the same will be distributed
by the Ministers and other designated VIPs of
the Central Government.
Thus a team of committed officers should be
appointed to oversee this exercise and also to
make the banking sector more vibrant. If the
Prime Minister desires, similar relief packages
with adequate economic justification can be
extended to other weaker sections.