Questions raised over efficacy of crop loan scheme in State

The State authorities’s scheme for waiver of crop loans prolonged by cooperative societies has triggered a debate on the efficacy of such credit score.

This assumes relevance because the Reserve Bank of India, in a examine throughout 2019, hinted that Tamil Nadu was amongst these States the place the likelihood of diversion of credit score for non-agricultural functions existed. The financial institution made the evaluation, utilizing the info for 2015-2017 which revealed that in Tamil Nadu, the ratio of whole agricultural credit score excellent in relation to its agricultural gross home product (GDP) was about 170% -180% . Again, utilizing the info for 2014-16, the financial institution concluded that Tamil Nadu received the credit score 4 occasions the worth of enter value requirement.

Another discovering was that opposite to the pattern of Kisan Credit Cards (KCC) rising as a most well-liked credit score instrument all over the nation, 88% of crop loans was disbursed in the State outdoors the scheme, which meant that not all of the loans had been lent in opposition to the manufacturing of land paperwork. The common apply has been to subject the loans in opposition to the pledge of gold jewelry.

Normally, the cooperative establishments account for 10% of the full quantity of crop loans given to agriculturists yearly. Considering the disbursal of round ₹9,700 crore by means of main agricultural credit score cooperative societies (PACCS) this monetary yr, it’s estimated that about ₹1 lakh crore would have been issued to the farmers, largely by means of business banks.

Personal loan

If repaid inside the stipulated interval, often a yr, the loans carry nil rate of interest in respect of the cooperative societies and 4% in the case of banks.

Officials, who’re observing the sample of farm credit score over the years, acknowledge {that a} substantial portion of the crop loans given by all types of monetary establishments is getting used as “consumption or personal loans”. An unintended constructive impact of this apply is that this retains the agricultural financial system going. However, as the aim behind giving the loans shouldn’t be getting served, it might be higher to offer monetary help on to all farmers, regardless of the dimensions of landholding. In different phrases, there may be an improved model of the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN), an earnings assist scheme.

P. R. Pandian, a farmer-leader based mostly in Mannargudi, concedes that the present credit score association advantages extra “non-farmers,” who personal farmlands however will not be dependent upon the farm sector for livelihood, than small and marginal farmers. It is because of the “exclusion of small and marginal farmers” that the agri GDP is much under the loan excellent.

Arupathy P. Kalyanam, nationwide organiser of the Self-Sufficient Green Village Movement, means that funds allotted below the PM-KISAN scheme and people offered by the Centre and States for the crop insurance coverage scheme be merged with each other. An enhanced quantity of assist, which would be the minimal help in the case of insured farmers, may be given to the farmers.

Notwithstanding the criticism in regards to the working of the cooperative sector, Seeniappan, a farmer of Dharmapuri district and M. Duraisamy of Namakkal, say that today, the societies give the loans after guaranteeing that loanees have the KCCs.

Both have taken crop loans from their respective PACCS and have been lined below the State authorities’s waiver scheme. They additionally assert that the incidence of “under-serving but well-connected” individuals getting the loans by means of the societies in common is negligible.