Lok Sabha Question No. 2907 (UNSTARRED), answered on 2018-03-13
Subject: Interest Subsidy to Farmers
Ministry: AGRICULTURE AND FARMERS WELFARE
Asked by: SRINIVAS KESINENI, BHEEMRAO BASWANTHRAO PATIL

## GOVERNMENT OF INDIA MINISTRY OF AGRICULTURE AND FARMERS WELFARE DEPARTMENT OF AGRICULTURE, COOPERATION AND FARMERS WELFARE

## LOK  SABHA UNSTARRED QUESTION NO. 2907

TO BE ANSWERED ON THE 13 TH  March, 2018

## INTEREST SUBSIDY TO FARMERS

2907.     SHRI KESINENI NANI: SHRI BHEEMRAO B. PATIL:

Will the Minister of AGRICULTURE AND FARMERS WELFARE कृ ष एवं कसान कयाण मंी be pleased to state:

- (a) the quantum of interest subsidy provided to the farmers in the country including Andhra Pradesh during the last three years, State and District-wise;
- (b) whether  any  study  has  been  conducted  to  gauge  the  impact  of  this  subsidy  on  the productivity of foodgrains and to establish a correlation between the size of farm holdings and repayment discipline among farmers, if so, the findings thereof;
- (c) the amount of loan burden on each farmer doing agricultural work in the country during the said period, State-wise; and
- (d) the details of action plan of the Government to waive off/reduce the burden of loan on farmers?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF AGRICULTURE AND FARMERS WELFARE

कृ ष एवं कसान कयाण मंालय म राय मंी (SHRI GAJENDRA SINGH SHEKHAWAT)

(a):  The Government since 2006-07 has been implementing the Interest Subvention Scheme (ISS)  under  which  Short  Term  Crop  Loans  upto  Rs.3.00  lakh  are  provided  to  the  farmers  at subvented interest rate of 7 percent per annum.  Further, in case of timely repayment of loans, an additional interest subvention of 3 percent as prompt repayment incentive is also provided to the farmers.  Thus, in case of prompt payee farmers, the Short Term Crop Loan is effectively made available at 4 percent per annum.  The Scheme is continued in 2017-18.    The quantum of  interest  subsidy  towards  payment  of  both    pending  claims  on  account  of  2%  interest subvention to banks and 3% prompt repayment incentives to farmers released to National Bank of  Agriculture  and  Rural  Development  (NABARD)  and  Reserve  Bank  of  India  (RBI)  by  the Government during the last three years is as under:

(Rs. crore)

| Year            | 2014-15   | 2015-16   | 2016-17   |
|-----------------|-----------|-----------|-----------|
| Amount Released | 6,000     | 13,000    | 13,397.13 |

The data on State/District-wise release of interest subsidy under ISS is not available.

- (b): No, Madam.

(c):     The National Sample Survey Office (NSSO) conducted a Situation Assessment Survey (SAS)  of  Agricultural  Households  during  its  70 th round  (January-December,  2013)  in  the  rural areas  of  the  country  with  reference  to  the  agricultural  year  (July,  2012-June,  2013).  Among various indicators related to the agricultural households, the survey also collected information about the amount of outstanding loans of the agricultural households at the time of the survey and the sources from which they were taken. These loans included all kind of loans taken by the agricultural households irrespective of the purpose for which such loans were taken. As per the results obtained from the survey, the average amount of outstanding loans per agricultural household  was  approximately  Rs.47000/-.  The  State-wise  figures  of  average  amount  of outstanding  loans  per  agricultural  household,  percentage  of  outstanding  loan  amount  taken from agricultural/ professional money lender, number and percentage of agricultural households having outstanding loans from agricultural/ professional money lenders as obtained from SAS 2013 is at Annexure-I.

(d): The  Government  is  not  in  favour  of  loan  waiver,  as  it  negatively  impacts  credit  and recovery climate and has severe systemic consequences. However towards reducing the debt burden of farmers and increasing availability  of  institutional  credit  to  farmers,  following  major initiatives have been taken:

- i. With  a  view  to  ensuring  availability  of  agriculture  credit  at  a  reduced  interest  rate  to farmers,  the  Government  is  implementing  the  Interest  Subvention  Scheme  (ISS)  since 2006-07.  In 2017-18, the Short Term Crop Loans up to Rs.3.00 lakh have been made available  to  farmers  at  a  subvented  interest  rate  of  7  percent  per  annum.  Further, additional  subvention  of  3  percent  has  been  provided  on  prompt  repayment,  thereby reducing the effective rate of interest to 4 percent per annum for such farmers. Some State Governments  in  fact  also  provide  additional  interest  subvention,  reducing  the  effective interest burden on short term crop loans to zero.
- ii. Government sets annual target for the flow of credit to the agriculture sector. Banks have been consistently surpassing the annual target.
- iii. Reserve Bank of India (RBI) has issued Priority Sector Lending Guidelines (PSL), which mandate all Domestic Scheduled Commercial Banks to earmark 18% of their Adjusted Net Bank Credit (ANBC) or Credit Equivalent amount of Off-Balance Sheet Exposure (OBE), whichever  is  higher,  as  on  the  corresponding  date  of  the  previous  year,  for  lending  to Agriculture.
- iv. As per PSL guidelines loans to distressed farmers to repay non-institutional lenders are eligible under priority sector. Besides loans to stressed persons (other than farmers) not exceeding Rs. 1,00,000/- per borrower to repay their debt to non-institutional lender are also eligible for the purpose of priority sector lending by banks.
- v. In order to ensure that all eligible farmers are provided with hassle-free and timely credit for  their  agricultural  operations,  the  Government  has  introduced  the  Kisan  Credit  Card (KCC) Scheme, which enables them to draw cash to purchase agricultural inputs such as seeds,  fertilisers,  pesticides  as  well  as  meet  other  agricultural  and  consumption  needs. The KCC Scheme has since been simplified by providing the farmers with ATM enabled debit card based on one-time documentation and built-in cost escalation in the limit, etc.

Contd…3/-

- vi. To  bring  small,  marginal,  tenant  farmers,  oral  lessees,  etc.  into  the  fold  of  institutional credit, Joint Liability Groups (JLGs) have been promoted by banks. The Government also promotes  formation  of  Farmer  Producer  Organisations  (FPOs)  in  a  big  way  to  enable farmers  to  leverage  economies  of  scale,  not  only  for  agricultural  inputs  but  also  for enhanced marketing opportunities.
- vii. Banks  have  been  advised  by  RBI  to  waive  margin/security  requirements  of  agricultural loans upto Rs.1,00,000/-, vide RBI's circular dated 18 th June, 2010.

RBI  has  issued    directions  for  Relief  Measures  to  be  provided  by  respective  lending institutions in areas affected by natural calamities which, inter alia, include, restructuring/rescheduling of existing crop loans and term loans, extending fresh loans, relaxed security and margin norms, moratorium, etc. These directions have been so designed that the moment calamity is declared by the concerned District Authorities they are automatically set in motion without any intervention, thus saving precious time. The benchmark for initiating relief measures by banks has also been reduced to 33% crop loss in line with the National Disaster Management Framework.

## Annexure-I

Average amount of outstanding loan per agricultural household, percentage of outstanding loans from 'agricultural/ professional money lender, number and percentage of agricultural households having outstanding loans as per the results of Situation Assessment Survey (SAS) of Agricultural households of NSS 70 th round (January -December 2013)

| State/ Group of UTs   | average amount of outstanding loan per agricultural household   | percentage of outstanding loan amount taken from agricultural/ professional money lender   | estimated number ('00) of agricultural households having outstanding loans from   | estimated number ('00) of agricultural households having outstanding loans from   | estimated number ('00) of agricultural households   | percentage of agricultural households with outstanding loan from   | percentage of agricultural households with outstanding loan from   |
|-----------------------|-----------------------------------------------------------------|--------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------|-----------------------------------------------------------------------------------|-----------------------------------------------------|--------------------------------------------------------------------|--------------------------------------------------------------------|
| State/ Group of UTs   | (Rs.'00)                                                        | (%)                                                                                        | agricultural/ professional money lender                                           | any source                                                                        | estimated number ('00) of agricultural households   | agricultural/ professional money lender (col.4/col.6)              | any source (col.5/ col.6)                                          |
| (1)                   | (2)                                                             | (3)                                                                                        | (4)                                                                               | (5)                                                                               | (6)                                                 | (7)                                                                | (8)                                                                |
| Andhra Pradesh        | 1234                                                            | 49.4                                                                                       | 12292                                                                             | 33421                                                                             | 35968                                               | 34.2                                                               | 92.9                                                               |
| Arunachal Pradesh     | 54                                                              | 5.6                                                                                        | 19                                                                                | 206                                                                               | 1080                                                | 1.8                                                                | 19.1                                                               |
| Assam                 | 34                                                              | 3.7                                                                                        | 409                                                                               | 5995                                                                              | 34230                                               | 1.2                                                                | 17.5                                                               |
| Bihar                 | 163                                                             | 51.2                                                                                       | 13492                                                                             | 30156                                                                             | 70943                                               | 19.0                                                               | 42.5                                                               |
| Chhattisgarh          | 102                                                             | 23.2                                                                                       | 686                                                                               | 9538                                                                              | 25608                                               | 2.7                                                                | 37.2                                                               |
| Gujarat               | 381                                                             | 6.6                                                                                        | 1619                                                                              | 16743                                                                             | 39305                                               | 4.1                                                                | 42.6                                                               |
| Haryana               | 790                                                             | 21.3                                                                                       | 1159                                                                              | 6645                                                                              | 15693                                               | 7.4                                                                | 42.3                                                               |
| Himachal Pradesh      | 280                                                             | 1.5                                                                                        | 56                                                                                | 2457                                                                              | 8811                                                | 0.6                                                                | 27.9                                                               |
| Jammu &Kashmir        | 122                                                             | 3.2                                                                                        | 80                                                                                | 3463                                                                              | 11283                                               | 0.7                                                                | 30.7                                                               |
| Jharkhand             | 57                                                              | 26.1                                                                                       | 1747                                                                              | 6464                                                                              | 22336                                               | 7.8                                                                | 28.9                                                               |
| Karnataka             | 972                                                             | 20.7                                                                                       | 8000                                                                              | 32775                                                                             | 42421                                               | 18.9                                                               | 77.3                                                               |
| Kerala                | 2136                                                            | 2.2                                                                                        | 395                                                                               | 10908                                                                             | 14043                                               | 2.8                                                                | 77.7                                                               |
| Madhya Pradesh        | 321                                                             | 24.2                                                                                       | 6643                                                                              | 27414                                                                             | 59950                                               | 11.1                                                               | 45.7                                                               |
| Maharashtra           | 547                                                             | 5.0                                                                                        | 2498                                                                              | 40672                                                                             | 70970                                               | 3.5                                                                | 57.3                                                               |
| Manipur               | 61                                                              | 19.9                                                                                       | 97                                                                                | 421                                                                               | 1762                                                | 5.5                                                                | 23.9                                                               |
| Meghalaya             | 14                                                              | 2.3                                                                                        | 11                                                                                | 84                                                                                | 3544                                                | 0.3                                                                | 2.4                                                                |
| Mizoram               | 29                                                              | 0.0                                                                                        | 0                                                                                 | 47                                                                                | 758                                                 | 0.0                                                                | 6.2                                                                |
| Nagaland              | 6                                                               | 0.0                                                                                        | 0                                                                                 | 65                                                                                | 2621                                                | 0.0                                                                | 2.5                                                                |
| Odisha                | 282                                                             | 9.5                                                                                        | 4785                                                                              | 25830                                                                             | 44935                                               | 10.6                                                               | 57.5                                                               |
| Punjab                | 1195                                                            | 15.0                                                                                       | 1223                                                                              | 7499                                                                              | 14083                                               | 8.7                                                                | 53.2                                                               |
| Rajasthan             | 705                                                             | 43.9                                                                                       | 15784                                                                             | 40055                                                                             | 64835                                               | 24.3                                                               | 61.8                                                               |
| Sikkim                | 99                                                              | 0.0                                                                                        | 0                                                                                 | 97                                                                                | 674                                                 | 0.0                                                                | 14.4                                                               |
| Tamil Nadu            | 1159                                                            | 25.5                                                                                       | 6943                                                                              | 26780                                                                             | 32443                                               | 21.4                                                               | 82.5                                                               |
| Telangana             | 935                                                             | 60.3                                                                                       | 8280                                                                              | 22628                                                                             | 25389                                               | 32.6                                                               | 89.1                                                               |
| Tripura               | 50                                                              | 2.3                                                                                        | 19                                                                                | 559                                                                               | 2445                                                | 0.8                                                                | 22.9                                                               |
| Uttarakhand           | 356                                                             | 6.5                                                                                        | 532                                                                               | 5387                                                                              | 10608                                               | 5.0                                                                | 50.8                                                               |
| Uttar Pradesh         | 273                                                             | 22.4                                                                                       | 13107                                                                             | 79081                                                                             | 180486                                              | 7.3                                                                | 43.8                                                               |
| West Bengal           | 178                                                             | 17.7                                                                                       | 5062                                                                              | 32787                                                                             | 63624                                               | 8.0                                                                | 51.5                                                               |
| Group of UTs          | 477                                                             | 7.0                                                                                        | 43                                                                                | 267                                                                               | 717                                                 | 6.0                                                                | 37.2                                                               |
| all-India             | 470                                                             | 25.8                                                                                       | 104948                                                                            | 468481                                                                            | 902011                                              | 11.6                                                               | 51.9                                                               |

Source: Table 14 and 15 of Appendix A, NSS Report No.576: Income, Expenditure, Productive Assets and Indebtedness of Agricultural Households in India The outstanding amount is pertaining to all kind of loans taken by the agricultural household irrespective of the purpose for which it was taken. The figures correspond to the amount of outstanding loan at the time of the survey

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