" Inclusive growth " is the shortest road to bankruptcy.

A massive robbery of taxpayer money is underway. It is called Kisan Credit Card. This allows farmers to borrow money at 7%, the government adding 2%, which is called " subvention " ( where the hell do they find these words? ). This nefarious scheme was set up in 1998-99 by Mr Yashwant Sinha of the BJP to provide assistance to farmers in case of crop failures or other emergencies. The idea was to help farmers in crisis to prevent them falling into the clutches of rural moneylenders. Public sector banks are required to lend 40% to priority sectors, of which agriculture is the biggest since 70% of population are engaged in it and so it makes the largest " vote bank ". Credit worthiness is not an issue and banks do not insist on repayment. Farmers maybe illiterate but they are not stupid. They are using this money to buy luxury items and for parties. Livemint, 04 April. " The interest subvention has distorted everything in this segment," said a banker who refused to be named. " The true purpose of this instrument was to make cheap credit available to the poor farmer. But many farmers draw such loans deliberately for consumption purposes. Banks, too, need to lend to this class of borrowers to meet priority lending targets." Total outstanding loans to KCC exceed Rs 2 trillion. However, the Chairman of a large PSU bank said," We increase credit limit only when the farmer repays fully. There are no major concerns." What he meant was that new loans are issued to enable farmers to pay off the old ones in a process called " evergreening ". In the 2 years to March 2012, the number of cards grew by 28% and loans by 76% which means that most loans went to previous card holders. Gross Non Performing Assets at Indian banks is Rs 1.75 trillion, up 43.1% from Rs 1.25 trillion a year ago but exposure to the agriculture and allied sectors is Rs 5.6 trillion as of January 2013 compared to Rs 4.3 trillion in January 2011. A bad monsoon could escalate bad loans from farmers and make the NPA situation much worse. This colossal waste of taxpayer money is covered up as " inclusive growth " and is feeding into the government's debts. The fiscal deficit is expected to be 5.2% in the last fiscal and the Current Account Deficit was 6.7% in the December quarter. Only Panama, Ukraine, Turkey and Kenya are worse. China has a surplus of 2.5%, Hongkong 5%, Malaysia 5%, Philippines with more than 12 typhoons a year has a surplus of 2.8%, Singapore a massive 16.2% and Taiwan 8.7%. Indonesia has a CAD of 2.3%, Brazil 2.2% and Mexico 0.4%. ET, 04 April. As one official remarked when S&P reduced India's credit rating to BBB- last year," We made a presentation arguing India's growth prospects, tax-GDP-ratio, efforts to fix the fiscal deficit are quite genuine and deserve better ratings than countries like Tunisia." At least we will never reach the level of North Korea. Something to celebrate?