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Loan waiver will help poor: Economist

The UK-based magazine says that it would help in transferring the money to the poor without any bureaucratic hurdle.
PTI | By HT Correspondent, London
UPDATED ON MAR 07, 2008 06:03 PM IST

Describing the budget proposal of Finance Minister P Chidambaram to waive Rs 60,000 crore farm loans as "crude", UK-based The Economist said that it would help in transferring the money to the poor without any bureaucratic hurdle.

"This loan waiver may be costly (over 1 per cent of GDP) and crude, but it has one big virtue: it transfers money to relatively poor people at the stroke of a pen, bypassing the cumbersome machinery of the state," the international magazine said in its editorial while commenting on India's budget.

"One indication of officials' resistance to change is Chidambaram's new proposal to erase the debts of 30 million small farmers", it said, pointing out that "the civil service is expected shortly to be awarded a huge pay rise, which will be swiftly embraced, along with tougher performance standards, which will be studiously ignored."

Chidambaram in his budget gave a debt relief of Rs 60,000 crore to farmers and later clarified that banks would be compensated for the losses over a period of three years.

It further said that Prime Minister Manmohan Singh made administrative reform a priority when he took office in 2004, and he duly set up a commission to look into it. "But even the finance minister admits that most of its deliberations have been academic," it added.

The editorial further said that reform has not completely petered out. The government has called for more independent scrutiny of public programmes and better monitoring of the money it spends. It also plans to experiment with "smart cards" that could cut out bureaucratic middlemen.

"But administrative reform needs to go deeper than this if only to prevent the public sector throttling economic growth," it said.

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