On poll roll, Jaswant wagon now goes to villages and farmers

Another fund for concessional loans to the small and medium industry was also announced.

With polls on his mind and $100-billion forex reserves under his belt, growing exports and burgeoning remittances from NRIs, shortage of funds is evidently the last thing on Singh’s mind—despite Rs 10,000 crore worth of sops announced yesterday through tax cuts.

So he promised to open the pursestrings: Rs 50,000 crore corpus for agri infrastructure, another Rs 50,000 crore for infrastructure projects and yet another Rs 10,000 crore for small and medium enterprises.

Most of these are two-three year plans for investments and if projects come in, funds can be arranged by leveraging forex reserves. In the meantime, think bigtime seems to be the mantra. In a bid to reach out to the rural masses before polls, Singh announced loans for them for housing and building of infrastructure at two per cent below the normal rate offered by banks. He also announced credit to small and medium industry—which could generate employment—at similar concessional levels to promote investments in smaller towns and mofussil areas.

A special Rs 50,000 crore fund was announced for a three-year programme to build agri-infrastructure and provide more rural credit. Singh said NABARD has been asked to work out details for creation of an agricultural infrastructure and credit fund (AICF) and that the fund would be made operational within four weeks and will be in addition to the already existing Rural Infrastructure Development Fund (RIDF).

Then again to promote investments in infrastructure projects, Singh announced the government’s decision that a consortium of banks would provide Rs 50,000 crore for infrastructure development at concessional interest rates to fund core sector projects over the next three years. Loans from this fund will be provided at two per cent below the prime lending rate (PLR).

More good news for corporates after yesterday’s duty cuts is that the government has eased the ECB (External Commercial Borrowings) norms for raising funds from abroad by putting it on the automatic route of clearance for five-year projects.

Even individuals have been allowed to transfer upto $25,000 abroad freely without any questions asked.

To transfer the ‘‘feel great’’ factor to the villages of Indian where most of the votes lay and conscious that economic growth had not reached the rural masses, the government today launched a new rural housing scheme ‘Atal Grameen Griha Yojana’ that will extend the benefit of cheap housing loans to rural India.

The scheme would be operational by April 1, 2004, Singh said.

And for dishing out these funds, the government says it’s committed to compensating all commercial banks, regional rural banks (RRBs) and housing finance institutions by introducing tax exemption on the entire income derived from advances for rural housing to cover the higher incidence of non-performing assets (bad loans or defaults) in rural areas .

To help the rural voters, the Goverment says it has recognised income and seasonal fluctuations linked to agricultural operations often influencing loan repayment capacity and ordered the National Housing Bank to identify ways of introducing flexibility for repayment in line with harvesting seasons.

After announcing substantial tax cuts for the industry, the government today said it would set up a Rs 10,000 crore fund for providing small and medium enterprises loans at rates 2 per cent lower than the bank lending rates. The fund will be operational within four weeks.

Singh said Industrial Development Bank of India (IDBI) would be converted into a bank and its functioning reoriented for focus on development financing. Similarly, the IFCI would be restructured through transfer of its impaired assets to an Asset Reconstruction Company and its merger into another large public sector bank. ‘‘For both these, the target date of completion is April 1, 2004,’’ Singh said.