ExpertDabbler

The P in P Chidambram may well be construed as ‘Pari Vallal’ after our Finance Minister’s proposal to waive off Rs.60,000 crores farm loans. But if one goes by Gurumurthy Article*, it seems, at best, more a case of misplaced generosity than a decision with any thought.

It’s all the more intriguing when RBI data clearly shows NPA in agricultural loans are only to the extent of Rs 7367 crores.
The Radhakrishnan group has identified the real culprit in farmer suicides - private lending, which obviously is different from the lending by scheduled commercial banks.

Now, Why do the farmers go to private money lender? Well, I tried to open a savings account for my mother in a nearby public sector bank and got treated like shit. And this is one of the better performing, friendlier PSU banks.
I can only imagine how the treatment will be for a small farmer who approaches a bank for farm loans in rural areas. In short,there is a definite need to redesign the delivery mechanism of agri credit. If that’s not done, then we are not addressing the core issue. The farmer suicides may well continue. And since we now have a precedent set by a Harvard educated FM, every Finance Minister who comes next will try to emulate PC’s (misplaced) generosity. Thus, it is not just a matter of waiving off Rs.60,000 crore once for all. We may have more in the offing whenever there is an election fast approaching.

Economics is certainly not my forte, but whatever little i know tells me that pushing Rs.60,000 crores into the system without any output in turn will push inflation - supposedly what Chidambaram claims he is trying to control now.

‘Ponaal pogattum Poda’ may be apt for a Sivaji Ganesan pathos, but it should not be the philosophy in matters like economics.

*- there are some sections in Gurumurthy’s article which i did not understand. For. e.g - his explanation of Rs. 2,40,000 crores and Rs.2,80,000 crores and how this Rs.60,000 crores are factored in there.