Much before India?s farmers see the benefits of P Chidambaram?s loan waiver scheme, India?s economic analysts are getting the benefit of intellectual stimulation, trying to solve a great puzzle: what does the FM really have in mind? Number crunching by this newspaper today on the front page shows that total agricultural non-performing assets (NPAs) in the banking system till March-end 2007 are Rs 64,628 crore. Remember that Chidambaram has said Rs 60,000 crore will be found for paying off farm loans of small and marginal farmers, as well as some portion of the debt of farmers above this class; there?s a timeline by which loans given out till March-end 2007 and outstanding as of December-end 2007 will be considered for the scheme. So the cumulative agricultural NPAs?that means bad loans of small, medium, big farmers and loans of all kinds, not just farm loans?till March-end 2007 are a little over Rs 4,000 crore more than the FM?s figure. That means, with a little more money than he has promised?if an FM can find Rs 60,000 crore, he can also find Rs 64,000 crore?Chidambaram can write off the entire bad loan burden of the farm sector, whether such loans were given out by commercial banks, regional rural banks or cooperative banks. Now come the questions.
Taking care of small and marginal farmers? debts may need less than half of Rs 60,000 crore?Business Standard has estimated that slightly over Rs 23,000 crore is needed for waiving loans for this category?and FE estimates that Rs 60,000 crore almost covers all the agricultural NPAs. So does the government plan to announce more waivers, looking to politically time them well and knowing that extra money won?t have to be found? That would be pretty clever. Or is it that, as some commentators have already speculated, the FM has drawn a distinction between amounts of money that need to be announced for political signalling and amounts of money that will be actually spent? That means, in this context, the government won?t have to spend even half the declared amount for waiving small farmer debts, but Congress leaders will keep talking about Rs 60,000 crore. That?s clever, too. Analysts as much as farmers will keep a close eye on the FM?s next statements and announcements on the waiver.