It's springtime in India, money grows on trees

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  • Published 9.01.04
Winter in God’s Delhi, spring in Vajpayee’s capital

New Delhi, Jan. 9: A gift-wrapped budget a day brings the voter nearer.

If yesterday was the day for the middle class, today was for farmers, small businessmen, students and senior citizens.

Finance minister Jaswant Singh announced funds and schemes worth Rs 100,000 crore, topping up the mini budget he presented on Thursday and threatened to add a few more zeroes, if the cabinet so demanded.

Never in the history of India — possibly not of any other country — has a government been so generous to its people in so short a time.

But then Prime Minister Atal Bihari Vajpayee has said: “As far as India’s performance and prospects are concerned, you can see that it is springtime everywhere.”

Under the measures unveiled today, cheaper loans through dedicated funds will be provided to farmers, small businesses and infrastructure projects. Students were promised low-interest loans for higher education and senior citizens were gifted Dada-Dadi bonds, which will carry interest rates higher than market rates.

“In a democracy, economic management is always political. There is no hidden politics, nor is it (the packages he has been announcing) blatantly political.... Whatever I have done has not violated parliamentary conventions or rules,” Singh said while announcing the package.

While parliamentary rules may not have been broken, most political analysts said the BJP-led government has broken an unwritten convention and tried to buy votes.

The accusation does not appear to wash with the decision-makers. Singh promised: “If I am asked by the cabinet, then there could be a third instalment.”

At the heart of the announcements made today was a Rs 50,000-crore agriculture infrastructure and credit fund from which farmers will get loans at 2 per cent below the prime lending rate (PLR), at which banks lend to borrowers with impeccable credentials.

At the current such rate, this will mean farm loans will cost about 8.25-8.75 per cent.

Taking a leaf out of the Congress book, Singh unwrapped the Atal Grameen Griha Yojana which will allow farmers to pay back the loans they take to build houses on easy repayment terms linked with harvesting seasons. Banks that disburse these loans will get tax breaks.

Over the last few weeks, agriculture minister Rajnath Singh has been pleading with Vajpayee to offer some benefits to farmers while pointing out that the largest state in the country — Uttar Pradesh — may see the BJP faring badly because they were not “merely unhappy but angry”.

The second biggest beneficiary of Singh’s largesse is large industry, which has been promised another fund. This government thinks big — this fund, too, is worth Rs 50,000 crore. Loans from it will also be given at 2 per cent below PLR to build power plants, ports, airports, roads and tourism, telecom and urban infrastructure.

Singh also announced that the foreign borrowing policy for business houses would be eased, allowing automatic approval, especially for infrastructure projects and small and medium businesses.

He explained this munificence by claiming that he was merely trying to remove another impediment to growth, which, according to Singh, may well surpass the Reserve Bank’s projection of 7 per cent.

The Prime Minister had set the pace for the day by announcing that Indian companies will be permitted to make overseas investments up to 100 per cent of their net worth. At present, they can invest only $100 million in any project.

The third biggest beneficiary of Singh’s bounty is small industry. It has been promised loans at interest rates 2 per cent below PLR from another fund to be started within four weeks.