Even as the State government has extended the last date for conversion of crop loans, there is lukewarm response among farmers to convert short term crop loans into medium term ones. They fearing that they could be caught in a debt trap.
A GO issued in June this year had enabled the farmers including marginal, small and other farmers (who have more than 5 acres of land holdings) to convert short term crop loan into medium term ones. August 31 was the last date for availing the facility. The order was issued mainly to provide sufficient time to farmers, who faced complete crop failure due to severe drought in 2016, to repay the loan within five years.
Acting upon the request of farmers, the State Government issued yet another GO recently by extending the last date for loan conversion up to December 31. But, it seems that it has not enthused the farming community in Tiruchi district.
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As per official statistics, out of about 25,000 farmers, who had availed crop loan to the tune of ₹91 crore in Tiruchi district between April 2016 and December 2016 from various Primary Agricultural Cooperative Credit Societies, about 7,000 farmers have repaid their loans. Remaining farmers were given opportunity to apply for fresh loan after converting short term loan into medium term loan.
But, up to August 31, just 906 farmers have converted their loan term.
“Except a section of progressive farmers, not many farmers have shown interest to avail the option,” admits K.C. Ravichandran, Joint Registrar of Cooperatives, Tiruchi district.
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Interaction with a cross section of farmers reveals that except a few farmers, who had availed high volume loans, other farmers are not ready for term conversion of loans as they fear that the medium term loan conversion will increase their debt enormously.
“If we opt for medium term loan conversion, farmers will have to pay about 11% interest with penal charges. Exercising the option could trap farmers in an unbearable debt net,” says Koundampatti Subramanian, deputy secretary, Cauvery Delta Farmers’ Welfare Association.
The issue has had its impact on distribution of crop loan to the farmers during the current year.
The crop loan target for the district up to December is ₹183 crore. But, it has disbursed loan to the tune of ₹120 crore to about 35,000 farmers so far.
“Most of the farmers, who repaid the crop loan taken in 2016 and those opted for medium term loan conversion, have availed loan for the current year too. We have received inputs that the farmers, who have pending dues, have been steadily repaying dues to avail fresh loan,” said Mr. Ravichandran.