Despite the Indian govt knowing it, small and marginal
farmers do not get institutional credit.
Time and again we have heard that agricultural credit plays an important role in improving farm production, productivity and mitigating farmers distress.It is primarily for this reason that the 12th Five-Year Plan (2012-2017) document of Planning Commission says: "Assuming agriculture growth of 4 per cent, the size of credit requirement in the 12th Plan period translates to about double the flow in the 11th Plan at Rs 8 lakh-crore, as against the level of Rs 4.75 lakh-crore achieved during 2010-11."
In 2012-13, a budgetary provision of Rs 5,75,000-crore for farm credit has already been made. A year earlier, in 2011-12, Rs 4,75,000-crore was provided. According to Reserve Bank of India, between 2000 and 2010, farm loans increased by 755 per cent. Certainly it provides all the reasons to cheer.
In a recent study on "Farm Credit" , the industry association ASSOCHAM analysing the disbursement of credit over the last decade, has listed misdirection in farm loans, increase in proportion of indirect credit by banks, misuse of interest rate subvention for diverting credit to other sectors, imbalances in quantity of credit in relation to size of the farm and crops they raise, and virtual exclusion of small and marginal farmers from institutional credit as some of the major problems besetting this sector. (ASSOCHAM calls for urgent reforms in farm credit. http://netindian.in/news/2012/09/02/00021451/assocham-calls-urgent-reforms-farm-credit).
If you have managed to underline the last point in ASSOCHAM report, it tells us very clearly where institutional credit has failed to deliver. By excluding small and marginal farmers, which forms nearly 80 per cent of the agricultural workforce, hasn't the government actually failed to reach the benefits to those who need it more? How can the Reserve Bank of India be a mute spectator to the visible misdirection, which in reality should be more visible to them, all these years? Isn't it a callous oversight or is it deliberate?
A damming news report in the Hindi daily Dainik Jagran, Oct 24, 2012 (http://bit.ly/XRZGRL) brought out the startling reality. According to the report, a confidential document available with the Ministry of Finance categorically states that despite the increase in farm credit by over 2.5 times in past five years, less than 6 per cent of the total institutional credit is made available to small and marginal farmers. Ironically, the Prime Minister, Finance Minister, Agriculture Minister and the ruling party along with its army of economists and planners never get tired of telling the nation of the remarkable strides taken in reaching credit to small and marginal farmers. Reserve Bank of India had even been talking of Banking Correspondents to reach the unreached.
In 2007, of the total credit of Rs 2,29,400-crores advanced by banks, small farmers share was a mere 3.77 per cent. In other words, 96.23 per cent of the farm credit disbursed in 2007 was actually cornered by big farmers or agribusiness companies. In 2011-12, while total farm credit had swelled to Rs 5,09,000-crore (against a target of 4,75,000-crore) small and marginal farmers got only 5.71 per cent. It is therefore obvious that despite knowing where the fault is the government had deliberately supported big farmers as well as agribusiness companies (an increase in indirect credit by banks by enlarging the definition of agriculture) in the name of small and marginal farmers.
This shocking revelation also tells us that much of the Rs 74,000-crore write-off of farm credit before the 2009 elections actually benefited big and commercial farmers. Small farmers have been left high and dry. They are left with no choice but to depend on the money lenders who charge exorbitant interests. No wonder, the serial death dance on the farms shows no signs of ending. As per a statement in Parliament, 2,90,470 farmers have committed suicide in the past 15 years. I am sure it has a lot to do with the non-availability of institutional credit.