Main slogans of the Income Tax department are: Fund, Principal and Punishment. All the three words have been derived from Chanakya’s Arthshashtra. If you go into the core of them, you will see that governance is the base of any economic activity. The same theoretical premise has been weaved in different words by other scholars who, for example, say politics is the bedrock of economic policy. While conducting his government’s first cabinet meeting after becoming Chief Minister of Uttar Pradesh, Yogi Adityanath announced waiving off farmers’ loan. However, this is not the first time when such announcements have been made. In 2008-09, the UPA government had waived off Rs 60,000 crore-65,000 crore worth of farmers’ loans. The Uttar Pradesh government too had written off Rs 50,000 crore farm loan in 2012. The Telengana government had also written off Rs 17,000 crore worth of farm loan in 2014. Then soon after swearing-in of the Narendra Modi government in 2014, Andhra Pradesh Chief Minister Chandrababu Naidu had put pressure on the Centre for waiving off loans of Rs one lakh crore. Jayalalithaa too had declared waiving off Rs 5000 crore worth of farmers’ loan in 2016.
When a government is formed after making pro people poll promises then it becomes very difficult for a Prime Minister or Chief Minister, especially in a condition when it surfaces that the last government emptied the coffer, to really fulfill those promises. It is not that the Uttar Pradesh government would not have evaluated lot of pros and cons before declaring farm loan waiver. Still question is raised as to how far sacrificing large public expectations and aspirations for the sake of serving political interests are justified? And then in the background of the fact that government of India has left no stone unturned to rid the system of corruption, while income tax officials are working day and night for the collection of taxes. In that condition, is imposing heavy loads on the public exchequer and banks justified?
If we look at this year’s tax collection, we will notice that there has been 18 per cent jump in total direct and indirect tax collection. While eight lakh and 47 thousand crore worth of revenue has been generated through direct tax collection, total volume of indirect tax collection has reached as much as seven lakh crore. It is not easy to gather such a large sum of revenue. In fact, lot of efforts has been put up by our income tax and excise officials in generating these revenues. In that perspective, if we put a glance over loan disbursed by public and private financial institutions in the past 10 years, we will find the situation is highly alarming. Public and private institutions have disbursed around 63 lakh crore worth of loan between the year 2004 and 2014 and if we convert them in US dollar they will stand at US$690 billion. If we study the economic condition of the nations around the globe, we will find that there are only 18 countries which have their economies over US$690 billion. That means none of around 200 countries have its economy as much strong and capable to shoulder financial burden as Indian financial institutions have. This shows that India forms a sizable part of the global economy.
Therefore, when any economy is big and sizable, it becomes essential to maintain a fiscal discipline to keep growth momentum going on. It is a matter of concern the manner the Prime Minister and the Finance Minister have recently expressed their worries over rising non-performing assets (NPAs) and escapade of some groups after taking loans from the country’s banks. Alarm bell starts ringing when overall NPAs of any bank reaches three per cent. But some banks’ NPAs have crossed 18 per cent. To maintain liquidity in the banks, the BJP-led NDA government had made a provision of around 25 thousand crore in the budget. It was done to provide every bank some sort of capital. Despite this, some banks’ condition continues to be critical. Amid this, an atmosphere of fear prevails in the public sector banks after former chairman of IDBI bank along with its half a dozen officials have been arrested for providing loans to Kingfisher Airlines.
In the course of demonetization, more than 15 lakh crore rupees were deposited with the government, but within three months, new currency notes of more than 9 crore rupees also came in the circulation in the market. Following the demonetization, it was expected that there would be a major cut in interest rates and those in jobs would be able to take loans at easy interest rate. After lot of efforts and soul searching, the government of India announced 3 to 4 per cent subsidy to the poor and low income group people for their purchase of house. Four per cent subsidy was given on the purchase of house costing Rs 9 to 12 lakh and three per cent on the purchase of house costing Rs 12 to 18 lakh. On the one hand, in almost all developed nations, subsidy has been removed. And, there has been marked improvement in education, health and transportation in these countries. Also, unemployment allowances are given in large scale in the US and Europe.
In majority of states of our country, political parties make pro-people promises during election time. If all these poll promises are fulfilled, our economy will suffer incalculable damages. Although, people’s trust on the government has increased after money provided to the poor under several schemes launched after ‘Jan-Dhan scheme’ has started reaching their accounts directly. The BJP has successfully formed governments in four of the five states that recently went to the assembly elections. It has been generally observed that in the states like Uttar Pradesh and Bihar, a very little portion of the total amount of money lying with public and non-public sector banks are spent for the loan waiver; a majority of them are given away in loans to the country’s corporate houses. However, as per the RBI rule, a large amount of a state’s total money lying with banks should be spent on help meant for loan waivers in the same state. If a RBI report is to be believed, more than 6 lakh crore rupees have today turned into NPAs. This is indeed a big sum. I am personally not against waiving off farmers’ loan. Yet I feel that instead of loan waiver, there is an urgent requirement of improving basic amenities, technology, education and communication system.
The government-launched schemes have to be availed to the people in more transparent manner. The budget of the government of India’s agriculture ministry is more than 70 thousands crore rupees, but how much of them in true sense reach farmers is a big question. Farmers get immediate relief with loan waivers, still a big question lying before them is what they should do after this. In the world, a person is helpless if he has no vision as to what he should do. If a person or a society clearly knows which direction he or she has to move then this particular knowledge itself is an indication of that person or society’s strength. More than 125 crore people live in our country. Statistics suggests that no other country in the world has as much a youth population as India. Yet unemployment is at its peak, while illiteracy has a fierce sway. In midst of these problems, we see that governance and administrative influence has a limitation up to only state capitals and some urban areas. Therefore, it has become essential that the way Prime Minister Narendra Modi is tackling problems with all seriousness and no nonsense manner, each Chief Minister and elected representative should also act with same decisiveness in handling issues. But truth is that the kind of commitment that Modi is showing is sharply missing in others. After him, there is none to fill a huge void in the political space of the country.