BJP-Spreading Dissidence

he counter-productive. A viable option would have been to regulate the structure of interest rates at a realistic level and combine that with rigorous quantitative guidelines on the distribution of bank credit. For some years to come until the financial system acquires competitive strength and the informal sector attains a degree of resilience, the earlier system of prescribing minimum and maximum of lending rates for banks is the only viable one for ensuring that the activities of institutional agencies do not partake the character of the activities of the age-old traditional moneylenders. The argument that small borrowers anyway pay usurious rates of interest to the informal credit agencies and hence can bear high rates of interest on their borrowings from banks and institutions is spurious. Apart from the question of equity which justifies a progressive structure of interest cost, it is pertinent to ask if even the organised sector manufacturing pro-jects could be viable at such usurious rates of interest; and if not, what economic rationale is there except their weak bargaining strength, for charging such high rates to small and medium manufacturing units?