Gil AST OF LOANS AND ADVANCES TO AGUlCl. LTURISTS. 75 



194. This policy of offering long periods of repayment should be 

 followed in all parts of India. For there is no part in which there 

 is not great room for the extension of agricultural improvement, 

 or, in which the State ought not to encourage such extension to the 

 utmost of its power. But in tracts secure from famine or severe 

 scarcity, the State will not be justified in running extraordinary 

 risks, and in such cases a strict estimate should be made of the life 

 and durability of the improvement. Following these principles then, 

 we recommend, either that "no maximum period should be prescribed 

 by the law, or that the maximum for the whole of India should 

 be far longer than the existing maximum of thirty-five years. In 

 view of the considerations stated below, fifty years would seem to be 

 a suitable term. Within the provinces, Local Governments might 

 be empowered to prescribe in the rules maximum periods for different 

 tracts and districts, and for different classes of works, having regard 

 to the durability of the work for which the loan is granted. As the 

 rules require the sanction of the Governor General in Council, it will 

 be easy for the Government of India to check any tendency, if it 

 arises, to allow excessively long, or unduly short, maximum periods. 

 The officer empowered to grant loans should, in every case, have full 

 power to fix the period within the maximum, if any, without prior 

 reference to superior authority. 



195. Permanent charge for interest. There is another alternative 

 which has much to recommend it. Working as before on the basis of a 5 

 per cent, rate of interest, the borrower, if he would build a thoroughly 

 durable well, might be charged Rs. 5-8 per cent., to be paid so long 

 as the well endures, without any demand for repayment of capital, 

 although he might repay at any moment any portion he wished, 

 thereby reducing the interest proportionate^. This would be identi- 

 cal with the former proposal if the well endured for fifty years and no 

 longer. It would be to the interest of the borrower to make 

 the work last as long as possible, but if it failed within 50 years there 

 would be a loss to Government. On the other hand, if the work 

 lasted more than 50 years, Government would gain, as it would 

 receive something more than the normal rate of interest. We think 



therefore that an arrangement of this description should be offered 

 as an alternative to a loan for a long but definite term, in all preca- 

 rious tracts where special stimulus is required. If the ryot does 

 not like the arrangement, it can be dropped. 



