Author: Editorial
Publication: The Economic Times
Date: March 15, 2008
Introduction: Rahul Gandhi Blows FM's Cover
Hurray! The Rs 60,000 crore loan waiver mystery
has finally been solved. When FM P Chidambaram in his budget speech mentioned
the scheme would cost the taxpayer all of Rs 60,000 crore, no one could figure
out how he'd arrived at that figure. All kinds of conjectures were made: the
waiver was a last-minute afterthought and since there was no provision for
it in the budget, it was a number the FM had pulled out of his hat. It was
the result of meticulous calculations and so on and so forth. But none of
these made sense. The total quantum of net non-performing assets (NPAs) of
all, repeat all, scheduled commercial banks as at the end of March 2007, stood
at Rs 20,100 crore according to the RBI's latest Report on Trend and Progress
of Banking. Since agriculture loans constitute roughly 18% of all loans, assuming
the same proportion in NPAs meant distressed agriculture loans were around
a paltry Rs 4,000 crore . Even if NPAs of the co-operative sector (roughly
Rs 32,500 crore) and regional rural banks (roughly Rs 1,000 crore) were factored
in, the numbers just did not add up. But now Rahul Gandhi has blown the FM's
cover. Participating in the debate on the budget in the Lok Sabha, the Congress
heir-apparent demanded that the largesse be increased. More specifically,
he has demanded an increase in the land ceiling stipulated under the scheme
(presently 1-2 hectares) and removal of the cut-off date (presently loans
overdue as on 31, December 2007). Given the Congress penchant to treat Rahul's
least wish as its command - witness the alacrity with which it extended the
National Rural Employment Guarantee Scheme to all districts the moment he
expressed the desire - it is now a foregone conclusion that both will be done.
And the bill in that case will not be Rs 60,000 crore, but many times that
amount.
As far as the ordinary taxpayer is concerned,
there's just one consolation. Considering the government's incredibly poor
record in delivery, it will be a while before the scheme is rolled out, by
which time the elections will intervene and hopefully we will get a more fiscally
responsible government. Yes, the Congress party might get some brownie points,
but the people of India have repeatedly shown they are not as dumb as politicians
might like to believe.
