Finance Minister puts numbers to his Rs60,000 crore loan waiver plan

New Delhi: Finance minister P Chidambaram, in the Lok Sabha, put some concrete figures on his earlier "magnanimous" gesture of waiving farm loans in his Budget speech on 29 February.

In a line, the sum toto of his speech was that taxpayers' money would go towards funding what many have decried as a populist gesture brought about by impending general elections next year.

In this context, finance minister Chidambaram has made plans for extending his current tenure as the finance minister, by stating that the affected banks and institutions would be repaid over a period of three years.

One wonders what a new finance minister, if so elected and selected, would have to say about Chidambaram's practice of planning for the future.

Even though banks would still be affected, particularly the co-operative and public sector ones, analysts on Dalal Street welcomed this announcement of having cleared the air somewhat. The representative index of bank stocks in the Bombay Stock Exchange, the 18-member Bankex, has lost 18 per cent since the budget announcement, partly driven by the perceived losses for banks, coupled with the general global economic downturn. One will have to wait till Monday to determine the effect the minister's speech has on bank shares.

"Higher growth has ensured revenue buoyancy and because of revenues, we have the confidence to spend on projects that we could have never imagined before,'' Chidambaram said in parliament today. The "financing of the package should be relatively easy given the buoyancy in revenues and efforts at expenditure restructuring," he said. Chidambaram is of the opinion that increasing tax collections in the future will fund this loan waiver, requiring the government to borrow little, or not at all, from external sources.