Ineligible Farmers Got India Aid in $9.5 Billion Debt Waiver

Almost a tenth of Indian farmers whose debts were written off by the government were not eligible for relief, according to an audit of a $9.5 billion plan that helped the ruling Congress party win a second term in power.

There were errors in nearly 25 percent of the cases where debt assistance was offered from 2008, the Comptroller and Auditor General of India said in a review submitted to parliament. About 13 percent of farmers the government considered qualified for help were denied funding by banks, the auditor said.

Lapses and errors “raised serious concerns about the implementation of the scheme,” it said in its report. The program was intended to cover 43 million farmers.

The Congress-led federal coalition is vulnerable to attacks from opposition politicians over its handling of government spending after a series of scams unearthed by the auditor dented its popularity. The agency had earlier criticized the sale of mobile-phone permits and the award of coal assets, sparking corruption probes and street protests. A general election must be held by May next year.

The auditor in a series of recommendations said bank officials who certified claims should be held responsible. Where specific cases of tampering are found, the Department for Financial Services should take “stringent” action, according to the report.

Farm Suicides

The auditor reviewed the debt relief program in 25 states April 2011 and May 2012. Its staff spoke to more than 90,000 farmers, including 9,000 who were not selected as beneficiaries.

More than 8 percent of farmers whose debt was cleared were not eligible, the auditor concluded, as the money had been borrowed to support businesses, buy cars or purchase land.

Congress swept to the biggest election victory in almost two decades in 2009 after announcing a series of pro-poor measures. The rural debt program was aimed at helping India’s 247 million farmers, reeling under rising costs and higher interest payments on loans.

About 250,000 Indian farmers committed suicide between 1995 and 2011, the New York-based Center for Human Rights and Global Justice said in a report that year. That is almost one every 30 minutes, according to the report.

Before it's here, it's on the Bloomberg Terminal.