A credit crisis seems to be brewing in the farm sector as disbursement of crop loans dips below 50 per cent for the second year in a row, experts say. Like the earlier kharif season, banks in Maharashtra have reported just 42 per cent disbursal of Rs 59,765.74 crore for the present rabi season.
In the past two-and-a-half years, Maharashtra had seen two successive farm loan waivers to help farmers get out of indebtedness. The first waiver was announced by the then chief minister Devendra Fadnavis in June 2017, in which pending loans totalling more than Rs 18,600 crore of at least 44 lakh accounts were waived. The second waiver was announced by Chief Minister Uddhav Thackeray during the winter season of the state Assembly. The latest waiver will waive the individual outstanding loans from April 1, 2015 with the upper limit being capped at Rs 2 lakh.
Healthy disbursal of crop loans — short term loans farmers avail at negligible rates of interest from banks to get seeds, fertilisers at the start of the cropping season — is a measurement of credit health, as higher uptake would mean more and more farmers qualifying for structured finance from banks. But lower uptake can point to a crisis in the farm sector with an increasing number of farmers being found ineligible for institutional finance due to poor credit rating or loan default.
Between the scheduled commercial banks (SCB) and the district central cooperative banks (DCCB), the former is faring poorly. Of the Rs 41,610.16 crore target given them, only Rs 15,28.95 crore — just 37 per cent — was disbursed till December-end. The DCCBs were given a target of Rs 18,155.58 crore, but Rs 9,525.53 crore — a little over 50 per cent — were disbursed till December 31. Overall, the state’s disbursal stood at 42 per cent for the present rabi season.
For the present financial year, uptake of institutional credit has been poor. Till September 30, 2019 banks had disbursed only Rs 39,591 crore of the Rs 87,322-crore target (45 per cent) set for them. This would be a very slight improvement from the 2018-19 fiscal’s performance when banks had reported offtake of Rs 37,921 crores of their Rs 85,464 crore ( 44 per cent).
Back-to-back loan waivers have led to farmers defaulting in repayment of previous loans. Low distribution of institutional credit has not affected sowing activities as farmers in Maharashtra have reported record increase in most rabi crops. Till January 17, the state has seen sowing of over 50.87 lakh hectare as against the 33.17 lakh hectare in 2018-19. Plentiful rain has seen farmers increase their acreage of crops like wheat and chana.
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