Break in credit cycle now behind Vidarbha woes

While suicides due to agrarian reasons have started declining in the past few months, break in credit cycle is set to become the new cause for farm distress in Vidarbha, as is evident in Andurkar’s case.

Andurkar initially took a loan of Rs 1 lakh from the State Bank of India about seven years ago. Under the PM’s package, his loan was rescheduled and he was given a fresh crop loan of Rs 31,000 last year. “He was happy last year when he got the loan,” says his younger brother Jitendra. “But then he suffered crop loss due to excess rain. He reaped only 2 quintals of cotton and 1.5 quintals of soyabean. He was very dejected.”

Agargaon lies in the belt that has suffered badly due to natural causes over the past few years.

Andurkar isn’t alone. About 60 per cent of the 10 lakh farmers who got Rs 2,000 crore worth of loans under the PM’s credit renewal plan last year were not able to refund their credit and hence didn’t qualify for fresh loan this year.

Incidentally, most of them got their loans towards August end and hence, were not able to utilise it for the kharif season, which begins in June. “Because inputs worth not more than Rs 200 crore were used last year, it is evident that the farmers used the money for clearing their previous private debts. It must have brought them a lot of relief, but they probably couldn’t save much for repayment. That’s why we suggested to the PM that interest waiver be continued for all for another year and fresh credits be made available to continue the cycle,” Amravati Divisional Commissioner S K Goel, the head of the implementing authority for the farm packages, told The Indian Express.

“Of course, this should be done only on a case-by-case basis and credit should be given only to non-willful defaulters among higher land-holdings. I suggested that for small and marginal farmers, holding 2 acres or less than that, waiver should be done without any inquiry,” Goel said. The Amravati Divisional Commissioner had asserted this in his presentation before the PM in Mumbai, also suggesting a total loan waiver for the next three years for farmers undertaking contract and organic farming.

“While organic farming brings down cost of cultivation, contract farming ensures steady price and a good market. They can be given loan waiver in three parts spread over three years,” he said.

Incidentally, the Radhakrishnan Committee on rural indebtedness also suggested continuation of the credit cycle for at least three-five years.