FM urged to ensure crop loans to all farmers

Most farmers borrowed from moneylenders, TS Debt Relief panel writes to FM

The State Commission for Debt Relief for small farmers, agriculture labourers and rural artisans has requested Union Finance Minister Niramala Sitharaman to provide loans to distressed farmers indebted to non-institutional lenders and crop loans to all farmers in order to keep engaged at least half of the population in farming during the COVID-19 pandemic.

In a letter addressed to the Finance Minister, Chairman of the Commission Pakala Srihari Rao stated that during the ongoing lockdown period, it is only the farming community that is working in fields contributing relentlessly to national food security, while all other sections are confined to homes. However, they are incurring losses in the process and a majority of them have already landed in debt trap of moneylenders paying exorbitant interest rate ranging from 36% to 48% per annum.

Stating that farmers constitute approximately 50% of the country’s population, Mr. Rao said they require at least ₹1 lakh to ₹2 lakh as long-term loan without insisting upon any surety or collateral security as planned for MSMEs and MUDRA. No bank has taken the RBI directions to provide loans on priority to farmers, although the apex bank has been advocating it since 2004, leaving a majority of the farming community to end up at the mercy of moneylenders, he noted.

As banks are not accessible to all people, over 20% of farmers have never availed any institutional credit in the form of crop loans and among those who are getting crop loans a majority are not getting the credit for their entire landholding or area of cultivation. While a farmers having 10 acres land is entitled for ₹4 lakh as crop loan at the scale of finance of ₹40,000 per acre, the banks were sanctioning maximum of ₹1.6 lakh only without asking for any surety. They were insisting on mortgaging of agricultural land for availing crop loans beyond ₹1.6 lakh, Mr. Srihari Rao explained.

The Commission Chairman requested the Finance Minister to consider the request to prevent farmers falling into the debt trap of private moneylenders by providing crop loans to all farmers and for their entire cultivated area to overcome the present crisis.

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Printable version | Jun 3, 2020 10:08:10 AM |

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