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HindustanTimes Thu,21 Aug 2014

Small farmers short-changed

Zia Haq, Hindustan Times  New Delhi, March 06, 2013
First Published: 00:09 IST(6/3/2013) | Last Updated: 01:51 IST(6/3/2013)

The UPA’s mammoth farm loan waiver may have left out a large number of small cultivators — the biggest and most vulnerable chunk -- because the scheme was messed up and may have been corruption-ridden, findings from a national audit report suggest.

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Small farmers, those owning less than two hectares, are highly challenged: they buy more food than they grow or sell, fetch lower-than-market prices and are suicide-prone because of debt traps.

With fewer quantities to sell, they need to pool together their produce at markets to compete with big farmers.

Financial agencies responsible for writing off loans of 36 million small farmers ignored nearly 13% indebted families, an audit of nearly 10,000 loan accounts revealed.

Since this was just a sample taken by the Comptroller and Auditor General, the actual numbers could be substantially higher.

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Farmers depend on loans for critical inputs, such as diesel for irrigation, seeds and fertilisers.

The waiver temporarily helped reverse farmer suicides by pulling them instantly out of poverty. For instance, in Andhra Pradesh, farmer suicides dropped 80% in 2009 from a year earlier, when the scheme was launched.

However, “serious lapses” mean the success was limited: nearly 34% of about 61,000 loan accounts checked were never declared “closed”, so these farmers remain blacklisted. This means they continue to be starved of funds.

Smaller plots are more expensive to cultivate and small farmers have higher consumption patterns, according to economists.

“This makes them highly dependent on borrowing,” said S. Mahendra Dev, the head of the Indira Gandhi Institute of Development Research in Mumbai. Their incomes are comparatively lower because they can’t match scales of big farms.


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