MP govt to push farmer loan scheme despite high debt-related deaths

  • Rahul Noronha, Hindustan Times, Bhopal
  • Updated: Sep 09, 2015 12:53 IST

The Madhya Pradesh government intends to expand the farm loan scheme to cover 10 lakh more farmers in three years, increasing the number of farmers entitled for loans to 38 lakh, against only 9 lakh beneficiaries on procurement.

This is despite studies and statistics which point to indebtness as the single biggest reason for suicide among farmers.

A proposed sop on farm credit is expected to expand the farmer creditor base by almost 40%. This means almost 10 lakh additional farmers would come under the farm credit net. The CM is very keen to announce the help very soon, said sources.

As per the latest NCRB report, MP accounts for 826 farmer suicides in 2014, the 3rd highest among all states in the country. The same report finds bankruptcy or debt responsible for 1,163 out of the 5,650 farmer suicides recorded in the country in 2014, making it the single biggest killer.

Sources in the state government said that the co-operatives department has sent a proposal to the finance department for clearance of a proposed new scheme that aims to give a 10% discount to farmers on repayment of loans.

The 3 models sent to the finance department for consideration include a financial impact of Rs 500 to Rs 1,200 crore annually. Presently, the state government gives interest-free loans to farmers.

The CM had promised farmers that he would ‘make up’ for the losses that they have suffered this year due to the withdrawal of the Rs 150 per quintal bonus on wheat and paddy purchase given by the state government. After examining various possibilities as part of the ‘making up’, the CM decided that the state government would give a 10% discount to farmers when they return the loans.

Sources termed good politics and economics as the reason behind the CM’s decision to plan the discount even though others like subsidy on fertilizers, direct cash transfers were also considered.

For one, there are 28 lakh farmers in the state presently who have taken loans from government-owned co-operative banks while there were only 9 lakh farmers who benefitted from receiving bonus on procurement.

The announcement of the new scheme would ensure a rush by farmers to secure a loan from the co-operative banks and abandoning of loans given by nationalized banks. Also, the co-operative department feels that its loan recovery rate will improve substantially, as large number of farmers would start repaying loans — essential to be eligible to get the discount.

Though the state government does not conduct any study to ascertain the impact of loans on farmers, the state human rights commission had ordered a study into the reasons for farmer suicides in the state.

“Inability to repay loans is responsible for the largest number of farmer suicides in MP,” said former director, agriculture and subject expert, GS Kaushal who had authored the study. The report was submitted to the state government but no action was taken on the same.

The state continues to feel positively about farm loans. “Availability of capital will help farmers adopt better inputs and improve seed replacement thereby further pushing agriculture productivity in the state,” said principal secretary, agriculture, Rajesh Rajora, defending the scheme.

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