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Directions (Q. 51-65):
Read the passagecarefully and answer the questions given belowit. Certain words/ phrases are given in bold tohelp you locate them while answering some ofthe questions.
Political ploys initially hailed as masterstrokesoften end up as flops. The 60,000 crore farmloan waiver announced in the budget writes off100% of over dues of small and marginal farmersholding up to two hectares, and 25% of overdues of larger farmers. While India has enjoyed8%-9% GDP growth for the past few years, theboom has bypassed many rural areas and farmerdistress and suicides have made newspaperheadlines. Various attempts to provide relief(employment guarantee scheme, publicdistribution system) have had little impact,thanks to huge leakages from the government’slousy delivery systems. So, many economiststhink the loan wavier is a worthwhile alternativeto provide relief.
However, the poorest rural folk are landlesslabourers, who get neither farm loans nor waiver.Half of small and marginal farmers get no loansfrom banks and depend entir ely onmoneylenders, and will not benefit. Besides,rural India is full of family holdings rather thanindividual holdings, and family holdings willtypically be much larger than two hectares evenfor dirt-poor farmers, who will, therefore, bedenied the 100% waiver. It will thus fail in bothits economic and political objectives. IRDPloans to the rur al poor in the 1980sdemonstrated that crooked bank officialsdemand bribes amounting to one-third theintended benefits. Very few of the intendedbeneficiaries who merited relief received it.After the last farm loan wavier in 1990, manybanks went slow on fresh farm loans for someyears. The wavier will similarly slow down freshloans to deserving farmers. While over dues toco-operatives may be higher, economist SurjitBhalla says less than 5% of farmer loans tobanks are overdue, i.e. over dues exist for only2.25 million out of 90 million farmers. If so, thenthe 95% who have repaid loans will not benefit.They will be angry at being penalised forhonesty.
The budget thus grossly overestimates thenumber of beneficiaries. It also underestimatesthe negative effects of the wavier encouragingwilful defaults in future and discouraging freshbank lending for some years. Instead of trying to reach the needy through a plethora of leakyschemes we should transfer cash directly tothe needy, using new technology like biometricsmart cards, which are now being used in manycountries, and mobile phone bank accounts.Then benefits can go dir ectly to phoneaccounts operable only by those with biometriccards, ending the massive leakages of currentschemes.
The political benefits of the loan wavierhave also been exaggerated since if only asmall fraction of farm families benefit, and manyof these have to pay brides to get the actualbenefit, will the waiver really be a massive votewinnerMembers of joint families will feelaggrieved that, despite having less than onehectare per head, their family holding is toolarge to qualify for the 100% waiver. All financeministers, of the central or state governments,give away freebies in their last budgets,hoping to win electoral regards. Yet, four-fifthsof all incumbent governments are voted out.This shows that beneficiaries of favours arenot notably grateful, while those not sofavoured may feel aggrieved, and vote for theOpposition. That seems to be why electionbudgets constantly fail to win elections inIndia and the loan waiver will not change thatpattern.
Test II
ENGLISH LANGUAGE
ENGLISH LANGUAGE
Directions (Q. 51-65):
Read the passagecarefully and answer the questions given belowit. Certain words/ phrases are given in bold tohelp you locate them while answering some ofthe questions.
Political ploys initially hailed as masterstrokesoften end up as flops. The 60,000 crore farmloan waiver announced in the budget writes off100% of over dues of small and marginal farmersholding up to two hectares, and 25% of overdues of larger farmers. While India has enjoyed8%-9% GDP growth for the past few years, theboom has bypassed many rural areas and farmerdistress and suicides have made newspaperheadlines. Various attempts to provide relief(employment guarantee scheme, publicdistribution system) have had little impact,thanks to huge leakages from the government’slousy delivery systems. So, many economiststhink the loan wavier is a worthwhile alternativeto provide relief.
However, the poorest rural folk are landlesslabourers, who get neither farm loans nor waiver.Half of small and marginal farmers get no loansfrom banks and depend entir ely onmoneylenders, and will not benefit. Besides,rural India is full of family holdings rather thanindividual holdings, and family holdings willtypically be much larger than two hectares evenfor dirt-poor farmers, who will, therefore, bedenied the 100% waiver. It will thus fail in bothits economic and political objectives. IRDPloans to the rur al poor in the 1980sdemonstrated that crooked bank officialsdemand bribes amounting to one-third theintended benefits. Very few of the intendedbeneficiaries who merited relief received it.After the last farm loan wavier in 1990, manybanks went slow on fresh farm loans for someyears. The wavier will similarly slow down freshloans to deserving farmers. While over dues toco-operatives may be higher, economist SurjitBhalla says less than 5% of farmer loans tobanks are overdue, i.e. over dues exist for only2.25 million out of 90 million farmers. If so, thenthe 95% who have repaid loans will not benefit.They will be angry at being penalised forhonesty.
The budget thus grossly overestimates thenumber of beneficiaries. It also underestimatesthe negative effects of the wavier encouragingwilful defaults in future and discouraging freshbank lending for some years. Instead of trying to reach the needy through a plethora of leakyschemes we should transfer cash directly tothe needy, using new technology like biometricsmart cards, which are now being used in manycountries, and mobile phone bank accounts.Then benefits can go dir ectly to phoneaccounts operable only by those with biometriccards, ending the massive leakages of currentschemes.
The political benefits of the loan wavierhave also been exaggerated since if only asmall fraction of farm families benefit, and manyof these have to pay brides to get the actualbenefit, will the waiver really be a massive votewinnerMembers of joint families will feelaggrieved that, despite having less than onehectare per head, their family holding is toolarge to qualify for the 100% waiver. All financeministers, of the central or state governments,give away freebies in their last budgets,hoping to win electoral regards. Yet, four-fifthsof all incumbent governments are voted out.This shows that beneficiaries of favours arenot notably grateful, while those not sofavoured may feel aggrieved, and vote for theOpposition. That seems to be why electionbudgets constantly fail to win elections inIndia and the loan waiver will not change thatpattern.
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Question : 51
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