The Centre’s decision to demonetise high-denomination currency notes has hit the disbursal of crop loans in Maharashtra. By November-end, only 17 per cent of the earmarked outlay had been disbursed, with some districts such as Beed, Gondia and Osmanabad reporting zero disbursal.
Cash crunch in rural areas and restrictions on the 31 district central cooperative banks (DCCBs) are the main reasons behind the low disbursal. Of the Rs 13,558 crore set aside as crop loan for the rabi season, only about Rs 2,302 crore has been disbursed by the end of November. Last year, by the end of November, Rs 1,031 crore was disbursed while at the end of November 2014, Rs 1,488 crore was disbursed.
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While on paper, this year’s disbursal seems to be better than the last two years, it is far below the targeted levels. The rabi seasons of 2014 and 2015 were marked by low soil moisture content, due to weak monsoons, while this year the water situation is satisfactory across the state due to a good monsoon. The rabi outlay for the year 2015-16 was Rs 1,274 crore while that for 2014-15 was Rs 9,156 crore.
Data from the state-level bankers’ conference shows only the district of Hingoli has achieved 95 per cent disbursal, while the other districts are way below the 50 per cent mark. The disbursal per cent in eight districts is in single digits, while the rest of the districts have achieved disbursals below 50 per cent. Beed, Gadchiroli and Osmanabad have seen zero per cent disbursal. The kharif crop loan disbursal this year stood at 88 per cent.
Commercial banks have managed to provide kisan credit cards to 100 per cent of their customers, but the DCCBs are still in the process of doing so. While the government has pushed for alternate payment methods like usage of cards or cheques, the agricultural input shops normally function only with cash.
The crop loan disbursal has been hit hard due to cash crunch in rural areas. The restrictions imposed on the 31 DCCBs have also made disbursals difficult in rural areas.
The DCCBs have more than 2,700 rural branches, as compared to the 2,300 rural branches of commercial banks. Although the DCCBs disburse fewer crop loans, the number of farmers who avail credit from them is higher than that of commercial banks. Commercial banks tend to provide loans to farmers with larger land holdings while DCCBs provide loans to farmers with smaller land holdings.
As many as 70 per cent of farmers in Maharashtra have smaller land holdings.
Dilip Mohite, director of Pune DCCB, said cash crunch and non-functional DCCBs were the major reasons behind the failure of rabi crops this season. “After two years, farmers in the state had enough water, but this man-made crisis has ruined their crops,” he said.
The Pune DCCB has distributed 31 per cent of its targeted outlay this year. The rabi sowing area of the state, as of December 19, stood at 47,51,388 hectares, as compared to 43,46,530 hectares in last years. The sowing of oilseeds, cotton and cereals also seems to have taken a big hit this season.