The foreshadow of elections

vershadowing everything else in the United Progressive Alliance government’s fifth budget presented by Finance Minister P. Chidambaram is the massive farm loan waiver and settlement amounting to Rs.60,000 crore. While the loans of small and marginal farmers are to be waived completely, in the case of other farmers, there will be a 25 per cent write-off. There is an obvious sense of election-eve urgency in the time schedule fixed for the completion of the waiver and settlement exercise by the end of June. From the standpoint of equity, given the depressed state of farming and the distress in the rural areas, the write-off would seem eminently justified as an income transfer programme. What would be less wholesome, however, is its impact on the banking system — the moral hazard it involves in weakening the obligation to repay.

The foreshadow of elections