New Delhi, August 25
The Haryana Chief Minister, Mr Om Prakash Chautala, today charged the Centre with pursuing a “pro-capitalist” policy and demanded that the credit policy of banks be tilted in favour of farmers.
The Punjab Chief Minister, Mr Parkash Singh Badal, on his part asked the Union Government to provide one-time Central assistance of Rs 200 crore to eliminate non-performing assets of cooperative banks in Punjab.
The demands came at a conference of Chief Ministers on recommendations of the task force on cooperative credit system and the Rural Infrastructure Development Fund, presided over by the Prime Minister, Mr Atal Behari Vajpayee.
Mr Chautala was not the only ally who was critical of the government, but even the new entrant in the NDA and the Agriculture Minister, Mr Ajit Singh, shared his differences with the Finance Minister, Mr Yashwant Sinha, in public.
Mr Ajit Singh said he had his differences over how the cooperative credit societies should be rejuvenated and at one point he countered Mr Sinha’s argument that the Centre was not in a position to fund the recapitalisation of the cooperative banks. Mr Ajit Singh intervened to point out that the Centre had as much responsibility towards the cooperative banks as it had with public sector banks as both involved public funds.
Mr Vajpayee referred to the systemic weaknesses that have developed over time in the cooperative institutions and urged the Chief Ministers and all political parties to help depoliticise, debureaucratise and professionalise cooperative institutions.
Calling for the establishment of better norms of cooperative governance and strict adherence to them, the Prime Minister said a task force under the chairmanship of Mr Jagdish Capoor had suggested a four-pronged strategy of strengthening the rural cooperative credit system that encompassed financial, operational, organisational and systemic aspects.
The task force has recommended a comprehensive package of revitalisation of the cooperative structure, besides a cooperative rehabilitation and development
fund, and a mutual assistance fund.
Mr Vajpayee said certain hard decisions were required to be taken to reliably and speedily achieve revival of cooperative credit institutions. He also pointed out that the Rural Infrastructure Development Fund (RIDF), whose initial corpus of Rs 2000 crore during 1995-96 had swelled to Rs 23,000 crore suffered due to poor disbursement. For instance the RIDF sanction for the north-eastern states and Sikkim was at least Rs 500 crore per year, but in the past two years only Rs 258 crore was disbursed.
Mr Badal, who kept his speech short, felt that the rate of interest on the RIDF from NABARD should be reduced from 10.5 per cent to 4 per cent on the pattern of priority sector loans. He also called for establishing a cooperative restructuring fund at the national level.
He suggested that a joint control and regulation system be evolved for cooperative banks in consultation with the RBI, NABARD and the Punjab Government.
Mr Badal said there was need for cooperative restructuring fund and NABARD should be asked to fund this. The Punjab Chief Minister strongly opposed the proposal to bring cooperatives from the State List to the Concurrent List.
Mr Om Prakash Chautala came down heavily on the government saying that it was ignoring the small loanees and encouraging big corporate houses.
He said the country’s successful food revolution was based on efficient bank credit to farmers and this line of help should not be squeezed.
He said when Devi Lal waived loans to farmers during his stint as Deputy Prime Minister there was a hue and cry in the country. Today the government had waived 22,000 crore worth of loans to big industrial houses and another Rs 8,000 crore for the same sector recently.
Mr Chautala said it was unfortunate that farmers got loans at the rate of 11.5 per cent while industrialists managed it at a rate of 10.5 per cent. He said the various recommendations on the cooperative sector looked fine in “English print and glossy paper” but in reality they were anti- farmer.
He demanded that the rate of interest be reduced for farmers, the RIDF assistance be increased and NABARD provide timely assistance to agriculturists.
The Finance Minister, Mr Yashwant Sinha, clarified that the impression that big industrial houses were being preferred for bank loans was not correct. He said the NPA from loans below Rs 25 crore amounted to Rs 5,000 crore while bad debts from loans over Rs 50 crore amounted to Rs 3,500 crore.
He pointed out that the banks had written off certain loans for technical reasons and for income tax purposes. Despite writing them off on paper, they continued to chase the defaulters, he added.
On the interest charged on the RIDF, the Finance Minister pointed out that the fund was financed by the banks and they could afford to give loans only at a particular rate of interest.
Earlier, the Finance Minister said in his speech that hard decisions were needed to tackle the problems in the cooperative credit institutions since these were too large to be rectified even by additional finances.
Several states voiced concern over duality in the control of cooperative credit institutions saying that it undermined the states’ control leading to mismanagement of such bodies.
They said any attempt to reduce the control of state governments over the cooperative institutions would create confusion.
Meanwhile, a joint committee of the Centre and states headed by Minister of State for Finance Balasahib Vikhe Patil was today set up to finalise within three months a Rs 8,200 crore financial package for the rehabilitation of cooperative banks.
The announcement was made by the Finance Minister at the conclusion of a one-day conference of Chief Ministers to consider the recommendations of the task force on cooperative credit structure.
Other members of the committee are Ministers for Cooperation of Maharashtra, Gujarat, Andhra Pradesh, Assam, Bihar, Uttar Pradesh, Punjab and West Bengal, Secretary (Agriculture and Cooperation) at the Centre, NABARD Chairman, RBI Deputy Governor Vepa Kamesam and Additional Secretary (Financial Sector), Ministry of Finance, who will be the convener.
Himachal Pradesh urged the Centre to increase the loan repayment period for seven years and a moratorium of three years on various infrastructural development schemes.
Participating in the Chief Ministers’ conference here, Himachal Pradesh Co-operation Minister said 100 per cent rural households in the state had been covered under the co-operative movement.
Mr Kaundal said the state had availed a loan assistance of Rs 267 crore against the sanctioned amount of Rs 478.51 crore for the implementation of various infrastructural development schemes under rural development funds.
