ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Reform of Financial System

Press reports on the report of the World Bank staff team on India's financial system have tended to be sensational. True, the report favours eventual privatisation of the financial system. But that is not the central theme. Greater efficiency and flexibility are the keys to reform and privatisation is seen as a means to promote them "in the long run".

Politics of Land Distribution in Uttar Pradesh

Uttar Pradesh Kripa Shankar WHEN zamindan was abolished roughly 90 lakh acres of land was vested in the 'gaon sabha' in UP. The Zamindari Abolition Committee of UP headed by G B Pant was opposed to any form of land redistribution despite the fact that it was aware of the huge concentration in land. The committee had noted that "a bare 1.49 per cent of the bigger landlords own nearly 57.77 per cent of the land"; that the 'sir' and 'khudhakast' land of zamindars alone accounted for one-fourth of the agricultural land in the State and that "top 804 zamindars own anything between one-fifth and one-fourth of the province''. Still the committee noted that '', . .we do not think that the results achieved would be commensurate with the discontent and hardship resulting from it. We, therefore, recommend that no limits be placed on the maximum area held in cultivation!' The committee observed that land distribution would "increase the difficulty of zamindars in adjusting them to changed condition", As if the committee did not have the interest of landless labourers in mind it opposed redistribution on the strange logic that the "dismemberment of large holdings would have the result of displacing large number of agricultural labourers". The committee had also noted that during the depression period on an average peasants were evicted from an area of 2.5 lakh acres annually which in later period came down to about two lakh acres per annum on an average. The 'sir' and 'khudhakast' land of zamindars totalling 74 lakh acres was cultivated by tenants.

PRICES- Chicken Come Home to Roost

have been allowed to enter the market as tenderers, with the proviso that they will be required to observe a minimum size or operation of Rs 20 crore per transaction which would be permitted only through the DFHI. The RBI perhaps believes that the expected flow of bulk funds will stabilise the call money market rates and help banks to meet their liquidity needs from the market. Furthermore, with a view to bringing short-term money market instruments within the reach of individual investors with investi- ble funds of a minimum of Rs 1 lakh and who can lock in these funds for a period of three months, the Reserve Bank has felt it "desirable" to allow scheduled commercial banks and their subsidiaries to set up Money Market Mutual Funds. The funds would ultimately be deployed in CPs, CDs, treasury bills and short notice money. To this end, was it necessary to in- troduce another tier of intermediaries in the financial market? One cannot help being sceptical about how these two measures taken together would help improve the efficacy of monetary policy, though they would allow the RBI to bask in the glow of pursuing monetary liberalism of sorts. As a part of the policy package, the Reserve Bank has liberalised the guidelines with respect to the issue of commercial paper and enhanced the limits for issue of certificates of deposits by commercial banks. The aggregate limit for issue of CDs has been now raised to Rs 7,537 crore. Although the amount mobilised by the banks through CDs has been small so far, the Reserve Bank should start considering whether these certificates should not be included in one of the monetary measures evolved by it.

Food Subsidies IMF Prescriptions Could Spell Trouble

Food Subsidies: IMF Prescriptions Could Spell Trouble Sukumar Muralidharan The rising burden of food and fertiliser subsidies indicates that market forces have been taking the food supply system further out of joint, rather than bringing it closer to equilibrium. The IMF prescription of gradually eliminating the subsidies ignores the underlying causes of this structural disjunction in the economy.

MADHYA PRADESH-Men Who Run Patwa Government

Men Who Run Patwa Government A Correspondent An extra constitutional centre of authority has clearly emerged around Madhya Pradesh's BJP chief minister Sunderlal Patwa, which even the RSS has been forced to take note of FOUR people enjoy immense clout in the Sunderlal Patwa government in Madhya Pradesh

CREDIT POLICY-Triumph of Monetarism

Triumph of Monetarism THE Reserve Bank of India in its half- yearly credit policy statement has provided a review of the current and emerging trends in the Indian economy. In 1990-91, as per the Bank's assessment, the economy presented a mixed performance. The agriculture sector recorded good growth. The industrial sector, on the other hand, slowed down perceptibly. Preliminary estimates place overall GDP growth in 1990-91 at 4.5 per cent, down from 5 per cent plus in 1989-90. The slack economic performance did not get reflected in price situation or in the balance of payments position. Inflation touched a double digit level of about 12 per cent for the first time in ten years, as measured by the wholesale price index. The rise in the consumer price index was sharper at 14.1 per cent in the first 10 months of 1990-91 for which data are available, as against a lower increase of 4.8 per cent in the comparable period of 1989-90. Monetary expansion in terms of M3 amounted to 15 per cent over and above a rapid rise of 20 per cent recorded in 1989-90. Growth in M,, the Reserve Bank's narrow concept of money, was also about 15 per cent after a sizeably larger increase of 22 per cent in 1989-90. The deceleration in both these measures was less impressive because it was mainly brought about by the deficit in the balance of payments, while Reserve Bank credit to government continued to surge without restraint and largely contributed to the monetary expansion. Deposit accretion at Rs 24,230 crore was lower than the RBI projected expansion of Rs 27,500 crore. In regard to credit, while food credit rose sharply by Rs 2,500 crore, non-food growth decelerated significantly to Rs 12,200 crore in the context of the subdued performance of the industrial sector; more importantly, the fall reflected the writing off of agricultural and other loans under the Agriculture and Rural Debt Relief Scheme, 1990. As for the outlook, the Reserve Bank forecasts that the economy would grow by about 4 per cent in 1991-92, although the 1991 monsoon and the effect of the difficult of balance of payment position are indeterminate at this stage. The increase in aggregate deposits is expected to be higher at Rs 29,500 crore, divided equally between the two halves of the year. Bank credit expansion has been estimated only for the first half of the year, at Rs 4,600 crore, shared by the food and non-food sectors in the amounts of Rs 1,100 crore and Rs 3,500 crore respectively. The monetary authorities intend to contain monetary expansion in 1991-92 at 14 per cent.

BIHAR-Death in Coal Mafia s Den

Death in Coal Mafia's Den Indu Bharti The violent death of Randhir Verma, an SP, during a bank dacoity in Dhanbad raises unwholesome issues. And the prime minister's visit to the area as a personal guest of a coal mafia don soon afterwards is even more chilling in its implications.

Political Parties and Sati

Ammu Joseph There is ample documentary evidence to show that Kalyan Singh Kalvi, a minister of the erstwhile Janata Dal(S) government, was a staunch supporter of the practice of 'sati', although he denied it when faced with a demand for his resignation.

NEW DELHI-Chance to Break with the Eighties

NEW DELHI Chance to Break with the Eighties BM The election to the Tenth Lok Sabha provides the opportunity to turn away from the disastrous political and economic course set by those who ruled the country in the eighties.

No Place Like Home

Clair Talwalker Are tribal cultures being destroyed by so-called development? The 29th Report of the Commissioner for Scheduled Castes and Tribes has some revealing data.

Small Farmers and an Irrigation Project

Project RAJASTHAN, second largest state in India, has an area of 34.2 million hectares. Statistics on the land use pattern indicates that 44 per cent of its geographical area is under cultivation, 6 per cent is under forests, 38 per cent is barren and the remaining 12 per cent is fallow. Though agriculture is important in the state's economy, it is dependent on monsoon. Less than one-fifth of its agricultural land is under irrigation. The area under cultivation can be increased only by increasing irrigation potential in the state.

MAHARASHTRA-Bane of Mushrooming Sugar Factories

MAHARASHTRA Bane of Mushrooming Sugar Factories H M Desarda CURRENTLY there is a political rat race on for putting up co-operative sugar factories in Maharashtra. There are already 96 sugar units operating in the State. And as of now 36 new units have been granted licences and proposals for as many as 130 units have been forwarded for sanction to Delhi and are awaiting clearance. Besides, a number of existing units are going in for expansion of capacity. The capacity of the newly sanctioned units being 2,500 tonnes a day, the net addition to capacity would be far greater than indicated by the number of new units. Chief minister Sharad Pawar has announced that the State government will provide Rs 360 crore to the new sugar units which have been accorded sanction, at the rate of Rs 10 crore per unit. The State Co-operative Bank would make the necessary loans available to these units. In fact, the State Co-operative Bank provides finance also for subscription to the share capital of the factories.

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