GROUND REALITIES OF AGRICULTURE CREDIT - SERIOUS CONCERNS
GROUND REALITIES OF AGRICULTURE CREDIT - SERIOUS
CONCERNS
Role of
credit in farming systems:
Credit plays very vital role in farmer’s crop production
systems. In fact, farmers decide what to grow, seeds & other inputs, choice
of the crop etc depending on the scale of finance available. Despite best
possible efforts by successive governments in reaching out to the farmers with
formal credit systems, the reach is still limited due to severe lacuna in the
operational strategy.
Micro finance which emerged as an alternative
credit to reach farmers in remote areas, addressing the procedural hurdles in
formal credit banking institutions, met with very limited success due to high
interest rates charged by these institutions and unfortunately they emerged as
legalised money lenders.
The seed & input supply shops are another
avenue for crop loans, again with high interest rate. Other than the interest,
the farmer is bound to buy whatever brand of seed or inputs that particular
dealer deals with and often farmers’ choice is limited. These dealers also,
with greed for making more profits, are going for inferior quality seeds,
inputs etc where they get highest discounts. Due to these practices and failure
of regulatory systems in controlling/monitoring the input supply chain, we are
coming across frequent crop failures and subsequent farmers’ unrest.
Though the governments are talking about
organised markets (APMC), e markets, minimum support price, one market one
nation etc, they still remain mostly as mere slogans and seriousness in
implementation is totally missing. In reality the traditional “money lenders”
in villages took new avatar as “commission agents” in APMCs, they advance loans
to farmers with tie-up to sell the produce in mandis through them only. The
buyers in APMCs advance funds to commission agents before cropping season and
in turn commission agents use those funds for giving loans to farmers. Due to this organised informal system of
credit and pre commitment of sale etc prevailing, the role of e markets became
very limited and often the systems are used as data entry platforms, defeating
the very basic purpose.
Why this
situation?
Despite so many policies, separate banking
system through NABARD, creating rural infrastructure etc, due to severe
constraints in the system, the reach of such facilities is limited to certainly
sections only, often to people who have voice irrespective of their social
status or class.
Another disparity which we can see clearly is saturation
of institutions, services, infrastructure in areas represented by powerful
political lobbies irrespective of parties or in prime areas. Whereas the remote
areas and areas with weak political presence particularly reserved
constituencies are having very thin presence of the facilities listed above.
The constitutionally protected administrative system
which is supposed to ensure even distribution of facilities in logical frame
work method is playing into the hands of political system. End result is
presented ill distribution of services even after 70 years of independence. It’s
unfortunate to state that successive governments are continuing with these inefficiencies
and very little is being done to touch this honey comb.
The Banking institutions prime responsibility in
the role of lead bank in respective districts is to ensure free and fair distribution
of loans with near 100 % coverage with bottom up approach. But in reality they
are following the top down approach and more focus is on reaching the targets,
not the need based supply of credit.
Field
realities:
Kollipara
is a fairly large village with over 18,000 population and mandal head quarter
in Tenali division of Guntur dist.
Mandal is an administrative unit in AP/TG, consisting of area with about
50,000 populations.
Based on the information gathered from few
villagers, over 65 % of land (mostly owned by OCs) in this village is under
cultivation by informal lease holders (oral agreements). Out of this land, 40%
is under cultivation by SC & BC communities and 60% is in the hands of OCs.
Most of these absentee landlords live in Hyderabad, other Indian cities, USA
etc and gainfully employed or engaged in other professions. These
informal long lease between OC farmers is fairly long term due to mutual trust,
when it comes to SCs & BCs , landlords frequently change the lease holders,
fearing that they may claim possession if allowed to continue to cultivate for
years.
The coverage of self cultivators under crop
loans is around 90 % and the same is as low as 10 % in case of lease farmers.
Even this 10% coverage is mainly from OC lease holders and hardly any SC/BC leaseholders
are covered under crop credit program.
Though Govt. Is trying to address the credit
needs of lease farmers with bank credit, it is not happening in ground due to lacuna
in banking system. Initially the lease
record in “ADANGAL (land ownership)’’ was followed, when there is resistance
from landlords it was simplified with “loan eligibility certificate” which can
be issued by revenue department (without consent of landowner) through physical
verification. In order to have even better coverage mandal agricultural officers
are vested with powers to certify land extent under lease, crop proposed to be
cultivated , size of loan and organise lease farmers as groups and link with
banks for loans.
On paper these systems looks very practical and
robust, but in practice hardly producing any fruitful results. These poor farmers have to bribe lower level
revenue employees to get loan eligibility certificate, even then it is not easy
path dealing with bankers. Similarly there are problems with groups being organised
by agriculture department.
It is further complicated in AP with recent
orders from CCLA, stating that loan eligibility certificates shall not be
issued without the consent of landowners. Looks like Govt. Yielded to the pressures from
powerful land owning class. The 10% leaseholders’ coverage under crop loans is happening
due to operation from landowners; otherwise the coverage will be negligible.
It is observed that 80% of absentee landlords
have access to Agri loans gold loans linked to Agri purpose (both at
concessional interest rates) and found that its bankers who encourage them to
take loans for want of meeting targets with less risk. These loans are being recycled in the same
village @ higher interest rates. In fact these absentee landlords are maor beneficiaries
in loan waiver schemes.
Due to this factual ground situation, most of the
lease land cultivators depend on money lenders, input suppliers for their credit
needs with interest ranging from 18 to 24 % per annum, against 3 to 9 %
prevailing in banking system. As observed the interest rates charged in Kollipara
by money lenders are fairly reasonable and I was told they are as high as 36 to
48% in many villages.
Imagine the flight of lease farmers who get
loans at higher cost and tied up with input suppliers and markets. How do we expect
them to survive under this disadvantage situations?
Concluding
remarks
How can we aim at doubling farmers’ incomes without
addressing the credit needs and credit linkage issues in the best interest of
the farmers?
Governments, NGOs, policy makers, international
consultants are requested to stick to ground rather than flying, travel to
villages, live in dusty environment, spend quality time staying in villages
rather than making flying visits by staying in star hotels , understand ground
realities and bring out comprehensive policy which is practical and implementable.
In this era of digital age, it is not difficult
to bring in transparent systems, provided we have the real will to do it.
“SECURE THE NATION
FOOD NEEDS BY SECURING FARMERS PRIDE”
B Guruva
Reddy9866889246
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