Upbeat after the loan waiver for farmers, Union Agriculture Minister Sharad Pawar on Saturday said there was no hurry to hold general elections. Denying that the loan waiver was meant as a pre-poll move, he told reporters, "Let us stay in power for another 14 to 15 months.'

BUDGET 2008-09 IMPACT DAY-2 No repayment of interest on outstanding loans. The Rs 60,000 crore farm debt waiver and relief package announced in the Budget may not be just in the form of special securities issued by the government, but involve actual money being reimbursed to them. The banks may have to forgo all interest on the outstanding debt amount. The package is only aimed at recovering the principal amount of the loans extended to nearly 40 million small and marginal farmers across the country. In addition, farmers availing of the loan waiver and relief package may have to agree to some conditions, including committing to not seeking debt relief again for a fixed period of time. The banks will be reimbursed over three years from June 30, 2008. In effect, the Rs 60,000 crore may be given in at least three annual tranches. Similarly, the bond component may also be spread in tranches till 2011. Senior government officials told Business Standard that the impression that public sector banks will lose out due to the debt waiver is misplaced. "Banks will actually get strengthened as they now stand to get back at least their principal amount, which otherwise is currently shown as bad debt on their balance sheet. The additional liquidity will help them', he said. However, officials said that the exact details of the debt waiver programme, the biggest hand-out in India's history, will take some time. "There are several options (to compensate banks without burdening the fiscal). We have four months to work that out. The details will be finalised', they added. The rationale for June 30, 2008 being set as the deadline for implantation of the debt waiver and relief scheme is that the loans had to be cleared by that date. The scheme applies to loans disbursed by scheduled commercial banks, regional rural banks and co-operative credit institutions up to March 31, 2007 and overdue as on December 31, 2007. Also read on Page 2: Sharad Pawar asks farmers not to repay money-lenders

The Sindh Chamber of Agriculture (SCA) on Sunday asked the government to increase wheat procurement target from 25 per cent to 40 per cent. The chamber's senior vice-president Dr Shahnawaz Shah said at a meeting at the Agriculture Complex that the government should pay growers an additional Rs40 for each 40 kilogrammes of wheat from its own funds to help them offset the high cost of fertilisers and pesticides. The meeting observed that the poor growers would suffer huge losses as the cost of production was much higher than the government's procurement rate of Rs510 per maund and demanded that the procurement offices should be established at union council level and the mode of payment to growers should be simplified. The growers called upon the newly-elected members of the national and provincial assemblies to take up the issue of sugarcane at the first session of assemblies and adopt resolutions against the excesses of sugar mill owners. They demanded that assemblies should ensure that the growers were paid the official rate of Rs63 per 40 kg and pointed out that the cane's production in the province had dropped by 20 per cent due to sugar mill owners' highhandedness and reduced price. Anwar Bachani, Mir Imdad Talpur, Mohammad Khan Sarejo and Nawaz Ali Samejo were among the participants of the meeting. HCCI: The president of the Hyderabad Chamber of Commerce and Industry Haji Mohammad Yaqoob on Sunday criticised raids on glass bangle factories by the officials of labour department and said it had seriously hurt the business. He said after meeting a delegation of the office-bearers of Glass Bangle Association that if bangle manufacturing units were closed due to harassment, thousands of workers including a large number of would lose their jobs. He said that the additional director and joint director of labour usually raided factories sometime before morning prayers, which was adversely affecting the production process. Under the relevant labour laws, the officials were supposed to visit the factories only once a year and they were creating harassment by conducting raids on a daily basis, he said. In a separate statement to press, the HCCI president demanded that the government should take back raise in the prices of petrol, diesel and electricity. Increase in power tariff would deal a serious blow to agricultural and industrial production and raise in oil prices would further ratchet up transport fare and prices of other essential items, he said. The cost of industrial production would shoot up considerably due to increase in the prices of petrol, diesel and electricity, which in turn would lead to hyperinflation, he observed. He said that the country was in the grip of energy crisis and urged the government to formulate short term and long term policies to tackle the problem.

The Union Budget's proposal to waive agricultural loans will bring some relief for farmers of the State. The farmers, who benefited from the loan wavier scheme of the previous Janata Dal (Secular)-Bharatiya Janata Party government in the State, would again benefit from the Centre's loan waiver scheme. There are 60 lakh small and marginal farmers in the State, according to the Agriculture Department. The Union Budget proposal to waive farm loans will benefit those amongst them who have taken loans from scheduled commercial banks, regional rural banks (RRBs) and cooperatives in the State. Of the 75.8 lakh farmers in the State, 36.55 lakh are marginal farmers holding up to one hectare of land. There are 28.13 lakh small farmers who have one to two hectares of land in their possession. The marginal holdings account for 48.2 per cent of the total holdings while small holdings account for 26.60 per cent in the State. Union Finance Minister P. Chidambaram offered a debt relief package f Rs. 60,000 crore in the budget (2008-09) to four crore farmers in the country. Under the one-time settlement scheme that will benefit large farmers, the government will give a rebate of 25 per cent on payment of outstanding loans. There are 11.11 lakh big farmers in the State. All agricultural loans disbursed by scheduled commercial banks, regional rural banks and cooperative credit institutions up to 31 March 2007 and overdue as on 31 December 2007 will be covered under the scheme. The implementation of the debt waiver and debt relief scheme will be completed by June 30. Indebtedness Indebtedness was one of the major factors for farmers' suicide and the agrarian crisis in the State. As many as 61.6 per cent of farmer households are indebted in the State against the national average of 48.6 per cent. In Karnataka, 73.5 per cent of farmer households who owned two hectares of land or less are in debt, according to the National Sample Survey Organisation (2005). Extended The Union Budget has proposed to extend the weather-based crop insurance scheme for the coming kharif season in the State.

"Punjab has been bleeding itself in order to feed the nation. It has sacrificed both of its precious natural assets

A historic Budget for the

RS 60,000-CRORE BONANZA: The waiver won't help indebted farmers in Chhattisgarh either as most of them hold four and five hectares. The mammoth farm loan waiver of Rs 60,000 crore is unlikely to benefit cotton farmers in Vidarbha and elsewhere as it does not address the fact that dry-land farming attracts far lower loans per acre as irrigated farming. An acre of unirrigated land is entitled to loans of up to Rs 4,000. The same land which is irrigated attracts loans of up to Rs 50,000. In other words, the waiver of loans taken for farmers with two hectares (or 5 acres) would not add up to much for a cotton grower who does dry-land farming, since they have to look at other informal means to meet their borrowing needs In contrast, the per acre loans available for growers of sugarcane, grapes and horticulture crops will benefit hugely. This difference had been pointed out by the Congress party president from Vidarbha Prabha Tai Rao when she had appealed for a waiver of up to Rs 30,000 for farm loans to Finance Minister P Chidambaram recently. "While grape and sugarcane growers will get lakhs of rupees waived in one stroke, the cotton and dry-land farmers will barely get Rs 30,000 waived,' Vijay Jaywanthia, a farmer-turned-activist and a leading voice from the farm distress zone of Vidarbha. The waiver won't help indebted farmers in Chhattisgarh which has been reporting farmer suicides because most of them hold four and five hectares (10 to 12.5 acres). Jaywanthia said the only way this waiver can work in favour of farmers is to waive up to a certain amount, say Rs 50,000 per farmer, or have different waiver limits for dry land and irrigated land farmers. The farmers of Vidarbha are even demanding that the finance minister should come out with a white paper on the money that will go to different tehsils in each district under the waiver. This will expose the anomaly that the waiver intentionally or unintentionally is going to benefit the sugarcane belt besides those growing horticultural crops, Jaywanthia added.

DEBT WAIVER The loan waiver will benefit about 30 million small and marginal farmers. In an apparent move to appease the huge rural vote bank, the government today announced the biggest-ever agricultural loan waiver package that will cost the exchequer a whopping Rs 60,000 crore. The move will benefit about 30 million small and marginal farmers, whose debts worth Rs 50,000 crore will be completely waived, and about 10 million other farmers. Under this package, while all the outstanding unpaid loans of small and marginal farmers will be totally waived, the other farmers will have to repay only 75 per cent of the borrowed amount under one-time settlement arrangement. Announcing the largesse in his budget speech, Finance Minister P Chidambaram said the agricultural loans, which were restructured or rescheduled in 2004 and 2006, would also be eligible for loan waiver and concessional repayment through one-time settlement arrangement. All agricultural loans disbursed by the scheduled commercial banks, regional rural banks and cooperative credit institutions up to March 31, 2007, and overdue as on December 31, 2007, but not repaid till today, would be covered under this debt waiver-cum-relief scheme. The tillers of up to one hectare of land would be considered marginal farmers and those having one to two hectares of land would be deemed small farmers. The finance minister announced that the implementation of the scheme would be completed by June 30, 2008. The farmers would become entitled for fresh agricultural loans from the banks after the debt waiver or signing an agreement for repayment of 75 per cent amount under the one-time settlement arrangement. He, however, did not elaborate on how the banks would be compensated for the waived loans. Referring to the indebtedness of the farmers, Chidambaram pointed out that the government had appointed a committee under the chairmanship of R Radhakarishna to examine all aspect of this issue. "The committee had made a number of recommendations but stopped short of recommending waiver of agricultural loans.' The finance minister, however, sought to justify this populist move, maintaining that the government was conscious of the dimensions of the problem and was sensitive to the difficulties of the farming community. He also asserted that the government had carefully weighed the pros and cons of debt waiver and had also taken into account the resource position while taking this decision. Chidambaram told Parliament that notwithstanding some shortcomings, the growth of agricultural credit had been impressive. "We will exceed the target set for 2007-08. For 2008-09, I propose to set a target of Rs 2,80,000 crore.' he said. He thanked the commercial banks and regional rural banks which, together, accounted for between 75 and 79 per cent of agricultural credit disbursed during the year. Chidambaram said short-term crop loans would continue to be disbursed at an annual interest rate of 7 per cent, adding that an initial provision of Rs 1,600 crore had been made for interest subvention in 2008-09.

India's Congress-led government announced on Friday a 15 billion dollars loan bailout for small farmers in a populist pre-election budget targeting the party's traditional poor rural supporters. Finance minister Palaniappan Chidambaram, releasing the budget for the year starting April 1 as India's blistering economic growth has begun to slow, announced a 600 billion rupees ($15.05b) relief plan. Some 30 million indebted farmers' loans would be fully waived and another 10 million would receive aid, said Chidambaram, who presented the budget ahead of nine state elections slated this year followed by national polls in early 2009. He pledged to wrestle down the fiscal deficit and tame inflation. But the lack of any big corporate incentives along with the debt giveaway dismayed the stock market which tumbled nearly 1.4 per cent.

The two major farmers' organisations in the State, the Karnataka Rajya Raitha Sangha (KRRS) and the Karnataka Prantha Raitha Sangha (KPRS), have welcomed the loan waiver scheme for small and medium farmers announced in the Union Budget, but have made it clear that it falls far short of addressing the serious agricultural crisis that they say the State is in. "A positive step, but incomplete,' is how G.C. Byya Reddy, General Secretary of the KPRS, described Union Finance Minister P. Chidambaram's scheme that offers to waive the crop loans taken from commercial banks, regional rural banks and cooperative credit institutions by small and marginal farmers up to March 31, 2007; and for other farmers offers a one time settlement scheme on loans overdue on December 31, 2007 with a 25 per cent rebate if the remaining 75 per cent is paid. "The loan waiver should have been extended to all sections of farmers other than big landlords as it is only a very small section of small and medium farmers who get loans from banks. A majority of them borrow from informal sources as banks do not consider them creditworthy,' Mr. Reddy told The Hindu. Only 26 per cent of the total farming community is covered by institutional credit, he said. Input costs "Not bad but not good either,' KRRS president K.S. Puttanaiah told The Hindu. "The Budget will not stop farmers from committing suicide as it does not address the problem of increasing cost of inputs, labour and other expenses that are pushing up the cost of cultivation and of living for the farmers. There is no talk of an agricultural policy,' he said. ] According to him, an estimated 10 lakh to 15 lakh agricultural families would be benefited by a crop loan waiver of about Rs. 15,000 crore. "However, this is only a temporary solution, not a permanent one,' he said.