Will farmers' creditworthiness ever improve?

Notwithstanding the repeated requests made by the administrations of various districts, banks have been reluctant to enhance the crop-loan credit limits to farmers. Bankers have been making boastful claims about the increasing crop loan disbursal year after year, a fact that is deceptive as they seldom meet Kharif and Rabi targets of crop loan disbursal. ETV Bharat looks at the current situation.

Hyderabad (Telangana):Ours is a country where farmer suffers bitter experiences at every step — right from the point when he applies for a loan to raising the crops to the stage where he needs access to remunerative price for his yield.

Notwithstanding the repeated requests made by the administrations of various districts, banks have been reluctant to enhance the crop-loan credit limits to farmers.

In Telangana for example, district officials recommended a crop loan allocation of Rs 57,000 per acre. However, the State level bankers committee pegged the loan limit to Rs 38,000 per acre. In Andhra Pradesh credit limit was fixed at Rs 23,000 per acre for paddy.

Bankers have been making boastful claims about the increasing crop loan disbursal year after year. But the data they quote is fraught with deception. With scant regard for the RBI guidelines, bankers have been resorting to book adjustments so far as crop loans are concerned. Studies clearly show that they seldom meet the Kharif and Rabi targets of crop loan disbursal.

A vast majority of farmers are still dependent on private money lenders for crop finance. According to official data, the number of rural families that are able to avail institutional loan facility from cooperative bodies has fallen to just 17 per cent.

In the snakes and ladders game of farming, tenant farmers are facing risks at every step. They don’t get benefit from any government scheme. This is exemplified by the plight of a tenant farmer from Machiryal in Telangana, who suffered crop loss in 30 acres of land he had taken on lease. The farmer and his family committed suicide as there was no other go left to repay the huge debt incurred for the wedding of the farmer’s daughter.

Timely credit will encourage the farmer to proceed with his farming activity. Indebtedness is getting worsened as bankers leave farmers at the mercy of private money lenders who charge exorbitant interest. Humane reforms that assure livelihood to farmers should begin with the reform of the crop-loan process. The creditworthiness of farmers will be enhanced only when the performance of banks and the policy of crop-loan disbursal are totally transformed.