Waiving off farmer loans not a permanent solution

10 March, 2013

The intention of the government is to provide low rate interest to the farmers to make them self-dependent but the existing set-up is making them handicapped.

In fact, providing easy loans to the farmers has been considered to be a solution of their various problems. Few days back, the prime minister while highlighting the achievements of the government informed that there had been 500 times increase in the loan disbursement to the farmers during the last nine years. However, during this period, Comptroller of Accountant General (CAG) in its report has pointed that there is hanky-panky in more that 24 per cent of loan waivers accounts.

According to the CAG report, out of 80,000 cases, in 20,000 cases number of irregularities were found and the maximum was in Andhra Pradesh which got the maximum benefit of 21 per cent in loan waiver. The government is disbursing the loans according to its capacity, but on the other hand, the bankers are of the view that due to poor return of loans, the internal condition of the banks is deteriorating day by day. Much has been discussed about the farmers’ plight but we have to think beyond loans as the solution of increasing losses in the agriculture.

It is not like that the farmers are not in need of loan but getting no loan at the time of need creates a problem for them. It is an admitted fact and banks confirm that 75 per cent loan is utilized for agricultural purposes while the remaining amount is spent on domestic and family requirements, like marriage ceremony, medical treatment and education of children.

In such a situation, the repay circle does not work and the notices from bank and government authorities are managed by paying the bribes to the concerned officials. The local politicians give assurance to the farmers that the bank loans will be waived off and start expecting the next waive off, with the result the repayment of loans is held up.

In the event of pressure from the bank, the farmers then move to the financer and when the loan of the financier is not repaid, and then he moves to the banks. So this circle is going on, till such time the waiving off announcement comes from the government.

As a result, the farmer has burdened himself with the load of loans and ultimately because of default, the result is auction of his lands and on becoming internally weak, he is forced to commit suicide. Both the farmers, who do not utilize the loan for the purpose it has been sanctioned for, and the bankers, who do not intervene for its proper utilization, delay the repayment and action process, and are therefore responsible for the mess.

Recently, in the CAG report, it has been pointed out that 15 per cent benefit has been given to those farmers who do not fulfill the basic conditions for the sanction of loan. The connivance of bank officers and brokers has been exposed in the report. The issues are raised at the Agriculture Minister level but no such system is adopted to bring on record the names of those persons who really utilize the loans. The loan amount has been raised to Rs.7 lakh crores from Rs.3.75 lakh crore during the year 2010-11 but the Opposition starts pointing out ignoring the proper check on its distribution and utilization.

Our Prime Minister says that those involved in the embezzlement of farmers loan waive-off cases, would not be spared. The Agri. Minister is talking to get the matter investigated on the basis of CAG report but the problem is why the government only talks about taking action? This question requires a detailed reply.

The need of the hour is to help the farmers to overcome the difficulty. The relationship between banker and borrower is a close one and must be based on trust. Each case has to be studied to find out the real causes why suicides are happening among the farmers. We should redesign the institutions and look whether social pressure was being created where people feel humiliated. At the same time, instead of increasing the loan in the budget every year, let's showing the best part of the farmer’s condition. The agriculture loan schemes should be reviewed afresh and implemented.