For the farmer?

According to government estimates, 37 million small and marginal farmers and 5 million ‘other farmers’ will now benefit.

•Which farmers are eligible?

As announced in the budget, marginal farmers have been defined as those cultivating agricultural land up to 1 hectare. A small farmer is defined as cultivating between 1 hectare and 2 hectares. They will get full debt waiver of their short-term crop loans. According to government estimates, in most states, the small and marginal farmers account for between 70 to 94 per cent of all farmers.

‘Other’ farmers are those owning over 2 hectares. They will get One Time Settlement (OTS) relief of 25 per cent waiver.

The new feature added in the revised package is the following: in respect of 237 identified (mostly dry) districts, the OTS relief will be 25 per cent of the overdue amount or Rs 20,000, whichever is higher. Thus, if a farmer’s overdue was Rs 60,000, he would have got Rs 15,000 written off in the original proposal, which will now be enhanced to Rs 20,000.

•What is the rationale for extending the scheme for ‘other’ farmers?

Finance Minister P. Chidambaram claimed that the reaction to the budget was that in dry and unirrigated areas of India, holdings are usually more than 2 hectares, hence leaving them out of the initial budget announcement. Their estimations showed that the average loan size is Rs 19,908 and the average size of the investment loan is Rs 13,224. A mere 25 per cent relief for these farmers was seen to be insufficient.

The government claims that by extending the scheme, roughly 60-65 per cent of large farmers in these 237 districts will get not 25 per cent relief, but full debt waiver, because the debt waiver is now a minimum of Rs 20,000.

•How will it be implemented?

Each branch will have to prepare both in hard copy and soft copy a list of the borrowers in that bank who are entitled to either debt waiver or debt relief. The name of the farmer, the amount of loan that is outstanding against him and the full debt waiver will be put up in that list. The second list will consist of other farmers with OTS relief of 25 per cent, and in some districts 25 per cent or Rs 20,000 whichever is higher.

The two lists will be finalised and the final list will be put up on the notice board of the branch of the lending institution. Immediately, the bank will issue to the small and marginal farmer a certificate of debt waiver mentioning the amount of debt that has been waived and take an acknowledgement from him.

•What kind of loans are covered?

Short term production loan will include loans given in connection with the raising of crops, where the repayment is 18 months. Working capital loan up to 1 lakh is covered. Under investment loan, one would be credit for direct agricultural activities such as deepening of wells, sinking of new wells, installation of pump sets, purchase of tractors, purchase of bullocks, land development, plantations, horticulture. Another category would include credit from allied activities — this includes dairy, poultry farming, goat and sheep rearing, piggery, fisheries, bee keeping, green houses and bio gas.

•Why are farmers’ groups unhappy?

Their calculations of the size of holdings as well as the average size of the loans are different. For example, the Bharatiya Krishak Samaj claims that most poor farmers in the dryland areas of Rajasthan have holdings ranging between 54 acres and 175 acres. They claim that the average size of the loan (Rs 19,908) calculated by the government is a misrepresentation.

Most importantly, according to the Rangarajan Committee, only 27 per cent farmers are covered by institutional credit. This package is only for farmers who source institutional credit.

•What are some of the solutions that they suggest?

Agriculture experts like M.S. Swaminathan have suggested that the definition of small and marginal farmers should be changed for the irrigated and dry farming areas — in regions like Vidarbha, the distressed farmers hold around 4-5 hectares but the income of such farmers is uncertain and their agricultural destiny bound closely to the monsoon.

•Why is this not seen as a solution for long-term agrarian distress?

Farmers want to make their business viable. For that, they need quality inputs like seeds, fertilisers and pesticides, and good marketing facilities. More farmers need to gain access to institutional credit.

sonu.jain@expressindia.com