‘Three of four farmers don’t go to banks’

Earlier this month, a dozen children whose fathers had committed suicide pushed by mounting crop debts, met Union Agriculture minister Sharad Pawar in Krishi Bhawan and appealed for help.

The farmers had been indebted to moneylenders, who sometimes charge annual compounding interest as high as 40 per cent.

For the coming Budget, the government is believed to have lined up a Rs 32,000-crore relief package for them that would allow writing off bad debts, but statistics have revealed that three out of four farmers in the country do not have access to institutional sources like banks and cooperatives when they need loans.

The point was brought home by the Committee on Financial Inclusion headed by C. Rangarajan in its report to the government this month.

The report said nearly 46 million farmer households in the country —that makes up 51.4 per cent — don’t take loans from institutional sources.

Despite the vast network of banks, only 27 per cent of total farmer households are indebted to formal sources. Of them, one-third also borrow from informal sources, the report said.

The National Commission on Farmers in its revised policy has stressed on the need for an agriculture credit policy. “If the government really wants to give a farmer-centric budget, it should adopt the recommendations of the National Commission on Farmers. The UPA will not come back to power but if it wants to do some face saving in its last year, it should focus on the farmer,” said Atul Kumar Anjan, member of the farmers’ commission.

Anjan said the policies followed now have created a win-always situation for the moneylender.

“The private moneylender not only charges exorbitant rates but also squeezes 60 per cent of the loan back from the farmer by selling him seeds, fertilizers and pesticides from his own shop,” he said. “Credit to farmers should come through the public sector.”