Debt relief for Himachal farmers

The state Cabinet accepted the recommendations in its September 27 meeting and has directed the deputy commissioners not to take any penal action. Last month, the Government also decided to exempt stamp duty and registration fee on loans for agriculture, horticulture and allied pursuits borrowed from any financial institution or bank, including cooperative banks. All schemes under agriculture and allied sectors covering medicinal plants, dairy, fish, poultry and floriculture shall be covered.

Though suicides have not yet marred the state’s agri-scape, farmers have increasingly found themselves strangled by debts, some continuing since the state’s formation in 1967.

Most of these are small and marginal farmers surviving on meagre farm incomes, who have been hit recently by drought, rains and a cloudburst. Though some of them have paid off the principal amount and interest, they continue to be defaulters because of the penal interest charged by the banks.

“What’s shocking is that some farmers have repaid the principal and interest, but are still defaulters and facing recoveries from banks,” says state’s Chief Secretary Ravi Dhingra, who heads the committee on proposed debt relief to small and marginal farmers, and recommended following the RBI instructions.

“We have prepared a detailed document on the plight of small and marginal farmers. Some remedial measures are under way to relieve them of debt-stress and other problems,” says P.C. Kapoor, the state’s Principal Secretary (Agriculture).

As per official figures, the outstanding short-term loan is Rs 721.37 crore, excluding the Rs 54 crore advanced by the state’s cooperative and agriculture banks. The long-term outstanding credit is Rs 1,108.12 crore.

In a single category of land development loans, more than 12,000 small and marginal farmers are defaulters, with the outstanding principal amounting to Rs 1.67 crore. On this, the interest to be recovered from 30,000 farmers exceeds Rs 1.3 crore.

Inquiries from the banks reveal that the RBI instructions issued in 1984 relate only to short-term loans. “For long-term loans, the banks can’t suspend the recovery process. Most of the bad debts and outstanding loans fall in other categories,” says R.B.S. Negi, General Manager, HP Coop Agriculture and Rural Development Bank.

The bank has advanced loans to 30,000-35,000 farmers, of whom 15,000 are long-term defaulters. It has also initiated recovery proceedings and auctioned the assets of 500-600 farmers in recent years.