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

A report says nearly 46 million farmer households in the country, that makes up 51.4 per cent, don’t take loans from institutional sources, reports Jatin Gandhi.

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.

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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.

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.”