Not even 10 pc of tenant farmers get bank loans

If farmers are in distress, the lot of tenant cultivators is even worse. They are effectively locked out of the credit system and cannot avail of input and interest subsidies.

October 19, 2015 05:02 pm | Updated 05:06 pm IST - HYDERABAD:

With the spectre of another drought looming large and kharif acreage coming down sharply, farmers face bleak months ahead. And for tenant farmers, the prospects are bleaker. Effectively, they have no access to institutional credit, and bear the brunt of rising input costs. And getting remunerative prices for their produce is anybody’s guess.

The vicious cycle leaves tenant farmers especially vulnerable to the vagaries of nature and markets alike.

All interventions by the Government have so far not alleviated their plight. Government sources admit that the Andhra Pradesh Land Licensed Cultivators Act, 2011 has made little difference to tenant farmers. The law entitles them to loan eligibility cards (LECs) but it requires them to enter into formal agreements with land owners in order to get bank loans. But few land owners are willing to sign a tenancy deed with a rent cultivator. Without such a document, banks refuse to lend to tenants. In sum, the Land Licenced Cultivators Act, 2011, touted as a revolutionary step to ease credit access to tenant farmers, has never taken off.

Not just bank loans, 90 per cent of tenant farmers are locked out of the interest subsidy extended by the government on crop loans. So they cannot access interest-free loans up to Rs.1 lakh or higher loans at Pavala Vaddi interest rates. Their only alternative is to turn to private money lenders, whose interest rates are astronomical.

There are 60 lakh farmers in the State. About 17 lakh of them are tenants. Since the Licensed Cultivators Act came into force, only 5.5 lakh , or 35 per cent, of the tenant farmers have got LEC cards so far. The cards have to be renewed every year.

Not that the cards matter to most tenants. Even those with LEC cards often do not get crop loans from banks. In kharif 2015, only 50,000 LEC holders, a mere 10 per cent, have been given bank loans. The kharif lending target was an impressive Rs.29,000 crore but tenant farmers got only Rs.115 crore, official sources said. As there are more defaults in the LEC segment, banks want the Government to stand guarantee for recovery.

LAW LOOKS THE OTHER WAY The Land Licenced Cultivators Act was brought in amid much fanfare in 2011, but its fine print has kept easy credit out of the desperate reach of tenant farmers. The deputy chairman of the Planning Department, Mr.C. Kutumba Rao says there is no comprehensive tenancy Act anywhere in the country. He says it’s time the Centre brought in an umbrella Act like the Land Acquisition Act and allowed States to introduce provisions to meet their specific requirements.

But agriculture officials advocate that the government can do its bit to nudge land owners to enter into agreements with tenant farmers so that the latter can get bank loans. One senior official, “At least the State should bring in reforms to the existing legislation to give confidence to land owners that their right over their land will not be compromised by the Land Licensed Cultivators Act. The present law is silent on the grey areas. That’s the crux of the problem.”

To address the problem of tenants, NABARD came out with the concept of Joint Liability Groups to cast tenant farmers into groups. But the idea was not nurtured and banks had their own reservations to lending to these groups either.

THE USURY OPTION And then there is the other law, the Andhra Pradesh Money Lenders Act, which was brought in as the answer to farmers’ woes. It was meant to rein in the usurious interest rates charged by private moneylenders. But with banks reluctant to lend to tenants, the government has been constrained in wielding the law. Sources say that it could only aggravate the tenant farmers’ problems if informal lending options are closed down without providing institutional credit to them. “We do not want to choke the informal credit supply without giving an alternative,” an official said.

TENANTS’ LITANY No bank loans

Fragmented holdings

Risky cash crops

Excess use of farm inputs

Monocropping

No insurance

Tricky markets

WHO’S WORST-HIT? 1. Anantapur

2. Kurnool

3. Chittoor

4. Kadapa

5. Prakasam

WHAT’S BEING DONE? 1. Focus on worst-hit districts for counselling to prevent suicides

2. Identify vulnerable villages in each mandal, and vulnerable households in each village

2. Debt swapping and restructuring of informal loans

3. Strengthening extension services, credit, post-harvesting and marketing mechanisms with the help of NGOs

4. Promote organic farming in 10 clusters in each district to bring down input costs and improve soil health

5. Making risk-management products like insurance tenant-friendly

6. Expanding the e-platform to all crops in two months for transparency in pricing

7. Set up rythu mitra groups, just like SHGs

How many farmers in A.P.: 60 lakh

How many tenants: 17 lakh

How many eligible for loans: 5.5 lakh (35%)

How many given kharif (2015) loans: 50,000

Kharif loan target: Rs.29,000 crore

Lending to tenants: Rs.115 crore

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