Banks refuse to Buy Zero Interest Bonds from the Government of Karnataka

 indian rupee

The news (1) today that the State Government of Karnataka has been betrayed by public sector banks who initially agreed to buy zero interest bonds from the State Government and then backed down, should be protested up and down the State on the streets and on the highways.

The Indian Express reports that all nationalised banks refused to accept zero interest bonds or waiver of interest on current loans, and so the people of Karnataka have an estimated Rs 30,160 crores interest burden over four years to waive crop loans.

This is outrageous. It proves that it is high time the State Government and the people of Karnataka had our own banks. Who are bankers to dictate terms to the sovereign? The fact that this is goes on in India despite the fact that the public debt is a public debt, which by definition has to be managed by democratically elected politicians, is outrageous.

The newspaper goes on: <<A sarcastic Chief Minister H D Kumaraswamy thanked “everyone who influenced banks to withdraw their support to the state government”. “The banks that had earlier agreed to waive interest and accept zero interest bonds have now backed out, thanks to many people. I will not name them, but banks have agreed to accept repayment in instalments, but with interest. I thank every person who contributed to banks withdrawing support,” >>. H D Kumaraswamy accused vested interests of attempting to embarrass his government.

So now instead of fresh money being injected into Karnataka at no interest, it will be the farmers and other people of Karnataka who have to slog away and sacrifice to GST whatever surplus from their labour they eke out. Around 2.317 million small agricultural producers will get some debt relief. But now it turns out that what the Government gives out it will have to collect again from the very recipients of relief amongst others, with its other hand, through no fault of either the Government or the people but due to the usurious liberal economics of nationalised banks and their backers, the BJP Union Government.

The Chief Minister said that “Officials have been appointed to ensure that farmers benefit from the waiver and not banks or middlemen.” But, as he implies, what we cannot ensure is that some other interests are not unfairly benefitting from usurious practices of nationalised banks.

The question is Who? Who exactly is the beneficiary of this usurious public sector banking system? Let’s see. It is a long established fact that those who lend with interest get richer and richer whilst those who pay interest get poorer and poorer. So who is getting the interest? The shareholders of the public sector banks, namely the Union Government. And who is paying the interest? The Karnataka producers through GST. This is unconstitutional and should be challenged.

But sadly no court in the land entertains law suits that accuse the Union of anti-constitutional economics, despite the fact that economic policies that usurp the constitution which mandates various policies that ensure equality, justice etc under the Directive Principles of State Policy, and under various other articles of the Constitution, are obviously by definition unconstitutional and so should be declared illegal.


Anandi Sharan was born in Switzerland, lives in Bangalore and last year worked in Araria District Bihar, India. She works on trying to find the best money system to help people adapt to climate change especially in India.


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