GRANT OF LOANS AND ADVANCES TO AGRICULTURISTS. 85 



212. Financing of advances and grants-in-aid. The amounts of 

 the grants to be provided for takavi advances, and for grants-in-aid of 

 private irrigation works, will necessarily come under revision from 

 time to time, say, at intervals of five years; but the revision should 

 be made rather with reference to requirements, and to the maximum 

 amounts that can be effectively expended under existing conditions 

 of administration, than to budget exigencies. We cannot too strongly 

 insist that the success of the policy which we advocate, will depend 

 on its being pursued systematically and continuously, at whatever 

 rate of progress may give the best results, and without being liable 

 to interruption in years of great financial stress. We consider that 

 the additional expenditure proposed will not impose any permanent 

 burden on the State, for there will be an adequate return in the greater 

 protection afforded against famine ; but we apprehend that consi- 

 derations of ways and means may sometimes render it difficult to 

 carry out this policy continuously. Assuming provisionally that 

 for the next few years the rate of expenditure will be as proposed, 

 there may be a difficulty in providing the grants required out of 

 current revenues. The 17 lakhs to be provided for grants-in-aid 

 will be practically a new item of expenditure, while the grants for 

 takavi will exceed the normal under this head by 40 lakhs. 

 There will not only be a great immediate increase in the demand 

 under the latter head, but its duration will be greatly prolonged if 

 the period of repayment of loans is extended as we have suggested ; 

 and we have also proposed a reduction in the rate of interest which 

 will involve the surrender of some of the profits which the State 

 has hitherto made on its takavi transactions. We have suggested a 

 universal rate of interest at 5 per cent, as the basis of all loan transac- 

 tions for agricultural improvements, in the belief that this rate 

 will be sufficient to cover all the risks of loss, but if this rate 

 is likely to be too low, it must be increased. We think that the 

 State should not look for direct financial profit on these transactions : 

 but we recognize at the same time that it must be a cardinal prin- 

 ciple of takavi transactions that they are self-supporting and involve 

 no loss to the State, and that the expansion of operations which are 

 recommended depends on the rigorous observance of this principle. 

 Subject to this condition, however, we think that the only limit 

 to the takavi grants should be the amount which the people are 

 willing to take, and the officers of Government are able to 

 distribute, with due regard to security and other considerations ; 



