The Hindu : `Bank lending to farm sector understated'

Online edition of India's National Newspaper
Wednesday, Jul 16, 2003

Southern States

Southern States - Andhra Pradesh

`Bank lending to farm sector understated'

By Our Staff Reporter

KURNOOL July 15. The agriculture sector is starved of credit support in the district, which is one of the main reasons for the farm sector crisis. The financial institutions are not meeting even one-fourth of the credit requirement of farmers.

Last year, the banks planned to advance Rs 348 crores as crop loan but could disburse only Rs 227 crores. This year target is set for Rs 435 crores. In fact, the agriculture sector requires, according to a moderate estimate, an investment of Rs 1000 crores. But the financial institutions were able to meet only one-fourth of the requirement of the needs.

The cultivable area in the district is estimated at nine lakh hectares for both seasons. Of it about, two lakh hectares has irrigation facilities. The climatic conditions of the district are suitable for varied crops. Over 20 varieties of crops are cultivated in the district. Seed production, oilseeds, paddy, chilli, jowar and cotton are some of the important crops in the district.

For remaining credit needs, the farmers are depending upon private money lenders who charged heavy interest rates. In a strange phenomenon this year, the migrant labourers who returned home with some hard cash are acting as money lenders in Pathikonda and Dhone areas. Small farmers who had no capacity to deal with financial institutions were borrowing from those who returned from metros. The lenders too preferred their neighbours for security and reasonable returns.

The Lead District Manager, Subba Rao, said the actual lending by banks was more than what was compiled. According to him, there was no proper system for collecting the information from rural branches of all banks. He believed that they could project only 60 per cent of the lending to the agriculture sector. Banks are hoping to increase their lending to the priority sector with the constitution of Raithu Mitra groups on the line of women groups. According to statistics, bank advanced to 11.70 lakh farmers in the district.

Meanwhile, the financial institutions too had a role in educating farmers about cropping pattern. According to experts, a district like Kurnool should not have faced drought if crops were planned properly. Last year, the district received a total rainfall of 539 mm as against the average fall of 670 mm accounting for a deficit of 20 per cent. But the rainfall was sufficient for many crops.

In fact, the farmers who failed to sow groundnut, cotton and paddy because delayed monsoon reluctantly cultivated alternative crops like sunflower, Bengalgram and jowar and took handsome profits exceeding even those from main crops.

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