Drought and demonetisation of ₹1,000 and ₹ 500 currency notes appear to have cast a spell on rural credit in Tamil Nadu. Fewer farmers have taken short-term crop loans through primary agricultural cooperative societies (PACSS) during the current financial year.
As on December 31, 2016, the number of farmers who availed themselves of loans was around 5.44 lakh, about 3.25 lakh lower than the previous year on the corresponding day.
Between April and December 2016, a sum of ₹ 3,028 crore was disbursed, whereas 8.69 lakh farmers had taken loans to the tune of approximately ₹ 4,712 crore during the corresponding period in 2015.
The successive failure of two monsoons — southwest and northeast — has affected several sections of farmers. This has also robbed them of the need for drawing more funds, according to officials in charge of the cooperative institutions.
Interest waiver
In the wake of demonetisation of the high-valued currencies in November, the problem of cash crunch has hit cooperative institutions in general and the PACSS in particular. The State government, in November, framed certain guidelines to enable the continued disbursal of crop loans. A few days ago, the Union Cabinet decided to provide a waiver of 4 % interest upfront to those who took loans between April 1, 2016 and September 30, 2016.
In Tamil Nadu, those who make prompt repayment of loans do not have to pay interest as the Central government provides 3 % rebate and the State government 4 % subvention.
J. Varadarajan, Tiruvarur district secretary of the Tamil Nadu Vivasayigal Mandram, says after demonetisation, the PACSS, in many places, had resorted to rationing in disbursal of sanctioned loan amounts.
Thanks to the State government’s recent scheme of waiver of agricultural loans, those who have not been benefitted by this move may have defaulted in their payments, rendering them ineligible to get fresh loans. This has also contributed to the fall in the number of farmers taking loans, he adds.
