GRANT OF LOANS AND ADVANCES TO AGEICTLTriUSTS. 63 



short of a permanent exemption will stimulate the owners of land 

 to that full activity, which is on every ground so greatly to be 

 desired. 



316. We recommend, then, that in all future settlements any 

 increase of assets due to the construction, otherwise than at the 

 expense of the State, of wells, tanks or other artificial sources of 

 irrigation should be permanently exempted from assessment to 

 revenue. We are aware of the objection that it is financially 

 unwise to exempt permanently the increase of assets due to irrigation 

 in the poorer soils, because it is in the poorer soils that irrigation 

 will lead to the largest increase of assets. But this objection is 

 met by the consideration that, from the protective point of view, 

 it is just the poorest soils which are most in need of irrigation. 



317. With a view to the encouragement of well sinking, we 

 would also recommend that an expert staff be appointed, with pow r er 

 to disburse loans on the spot. Under the advice of this staff trial 

 wells might be dug, the cost being recoverable from the landholder 

 only if good water is reached. In all cases we recommend that partial 

 or complete remissions should be granted if the well is a failure 

 from causes beyond the borrower's control. The cost of this expert 

 staff and of these remissions should be charged to a fund, constituted 

 from the difference between the rates of interest at which the Govern- 

 ment respectively borrows and lends. 



318. In this connection we would call attention to the recom- 

 mendation of the Famine Commission of 1880, that the rate of 

 interest should be reduced. It is a matter of financial calculation ; but 

 we consider that a rate of 5 per cent, would be sufficient. The principle 

 is already admitted; for in the rules of most provinces provision is made 

 for loans at low rates of interest, or altogether free of interest, and in 

 Madras and Bombay the ordinary rate for these loans is 5 per cent. 

 But we think the time has come to introduce a general rule of greater 

 liberality. 



319. Although the rules in this respect are generally liberal, 

 something may also be done to stimulate improvements by a more 

 careful adjustment of the payment of interest to the time when the 

 profits begin to accrue, and by lengthening the period allowed for re- 

 payment of the principal. We also think that permission should be 

 given to Local Governments to substitute for recovery of the principal 



