scorecardresearch
Follow Us:
Sunday, April 18, 2021

Farm loan default rises despite waivers, robust commodity price

As of September 2020, the outstanding agriculture loan stood at Rs 1,40,686 crore as against the Rs 1,31,578 crore of September 2019. Ironically, this increase comes even as the state completes another cycle of loan waiver.

Written by Partha Sarathi Biswas | Pune |
Updated: February 27, 2021 10:25:32 pm
Maharashtra news, Maharashtra farm loans, farm laws, agriculture sector, indian economy, farm loan weavers, india news, indian expressDespite the traction the sector had seen in terms of increased commodity prices, farm indebtedness in Maharashtra shows no sign of abetting. (Express Photo)

In a year marked with serious economic downturn, agriculture has been the only sector which had registered a positive growth. Despite the traction the sector had seen in terms of increased commodity prices, farm indebtedness in Maharashtra shows no sign of abetting.

As of September 2020, the outstanding agriculture loan stood at Rs 1,40,686 crore as against the Rs 1,31,578 crore of September 2019. Ironically, this increase comes even as the state completes another cycle of loan waiver.

For the better part of 2020-21, the pandemic led to major disruptions in the country’s economic life. Officially, India had entered into a recessionary phase with back to back financial quarters recording negative GDP growth. However, even during such gloomy times, the agriculture sector had recorded positive growths. Commodity prices had been bullish which had led to farmers earning good margins.

However, outstanding crop loan continues to be high, which points to farmers failing to clear the loans they avail from the banks. Crop loan refers to the the short-term lending to the farm sector by banks at a subsidised interest rate of 7 per cent. Timely repayment of the loans attracts a total subvention of 6 per cent, thus farmers technically get the loan at just 1 per cent interest rate.

Bracketed under the priority sector, this lending is mandatory on banks with the state-level bankers conference (SLBC) – the committee of bankers keep a track on agricultural credit disbursal and its repayment.

Analysis of data by the SLBC shows that of the total outstanding in agriculture sector, Rs 23,550 crore has been deemed as non-performing asset (NPA), which forms 20.49 per cent of the amount. For most banks, high levels of NPA in the agriculture sector has been a cause of concern.

This high level of outstanding comes even as the state has completed another round of loan waiver last in the form of the Mahatam Jyotirao Phule Karja Mukti Yogna. This flagship program of the MahaYuti government has seen waiver of outstanding loan of Rs 21,991 crore belonging to 29 lakh farmers. Of these, 18.33 lakh farmers were given fresh finance amounting to Rs 12,124 crore.

Shiv Sena leader from Nanded Prahlad Ingole blamed various conditions and filters leveled by the government as the reason for the increased outstanding in the state.

“What is necessary is a full waiver without any filters which will solve the problem of indebtedness of farm sector,” he said. Ingole also called for a special one-time settlement scheme by the Maharashtra Gramin Bank which he said was as important lender in the state.

“Most of the other banks have already announced such scheme and we want the Gramin bank also to announce the same. This will help reduce the outstanding in the state,” he added.

📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines

For all the latest India News, download Indian Express App.

  • The Indian Express website has been rated GREEN for its credibility and trustworthiness by Newsguard, a global service that rates news sources for their journalistic standards.
0 Comment(s) *
* The moderation of comments is automated and not cleared manually by indianexpress.com.
Advertisement
Advertisement
Advertisement
Advertisement
x