Lok Sabha Question No. 2925 (UNSTARRED), answered on 2018-03-13
Subject: Study on Farmers Debt
Ministry: AGRICULTURE AND FARMERS WELFARE
Asked by: BHAVANA GAWALI (PATIL), ARVIND GANPAT SAWANT, PREM SINGH CHANDUMAJRA

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

## LOK  SABHA UNSTARRED QUESTION NO.2925

TO BE ANSWERED ON THE  13 TH  MARCH, 2018

## STUDY ON FARMERS DEBT

2925.  SHRIMATI BHAVANA PUNDALIKRAO GAWALI PATIL:

SHRI ARVIND SAWANT:

PROF. PREM SINGH CHANDUMAJRA:

Will  the  Minister  of  AGRICULTURE  AND  FARMERS  WELFARE      ‡ãðŠãäÓã एवं  कसान कयाण ½ãâ¨ããè be pleased to state:

- (a) whether the Government has taken note of huge debt  burden  on farmers  in  the country including Punjab;
- (b) if so, the details thereof and the reasons therefor along with the response of the Government thereto;
- (c) whether  the  Government  has  conducted  any  survey/study  to  ascertain  the quantum of farmers' debt and the reasons for the rising debt burden on the farmers and if so, the details and the outcome thereof;
- (d) whether the  Government  is  considering  a  debt  waiver  scheme  for  the  farmers including any settlement scheme on the lines of one tenth settlement for the corporate; and
- (e) if so, the details thereof and the time by which it is likely to be implemented?

## ANSWER

MINISTER OF  STATE IN THE  MINISTRY OF  AGRICULTURE AND  FARMERS  WELFARE

‡ãðŠãäÓã एवं कसान कयाण ½ãâ¨ããÊã¾ã ½ãñâ Àã·¾ã ½ãâ¨ããè ( SHRI GAJENDRA SINGH SHEKHAWAT)

- (a) to (c) The  National Sample  Survey  Office  (NSSO)  conducted  a  Situation Assessment  Survey  (SAS)  of  Agricultural  Households  during  its  70 th round  (JanuaryDecember, 2013) in the rural areas of the country with reference to the agricultural year (July,  2012-June,  2013).  As  per  the  results  obtained  from  the  survey,  the  average amount of outstanding loans per agricultural  household  was approximately Rs.47000. The  State  wise  amount  of  debt  burden  per  agricultural  household  is  at  Annexure. These loans included all kind of loans taken by the agricultural households.

To  reduce  the  debt  burden  of  farmers  and    to  increase  availability  of  institutional credit to farmers, following major initiatives have been taken by the Government :

- 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, under which 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. The scheme is continued in 2017-18.   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.
- 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.

- viii. 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.

(d) & (e): The Government at present is not considering any debt waiver scheme for farmers  as  such  loan/debt  waivers  may  impact  the  credit  culture  of  a  State  by incentivizing  the  defaulters  even  if  they  are  in  a  position  to  repay  the  loan  and create/amplify  the  moral  hazard  by  discouraging  those  borrowers  who  have  been regular in repaying their loans.

Annexure State wise average amount of debt burden per agricultural household

| States/UTs        |   Average Amount of Debt per Cultivator Household (Rural) Rs. |
|-------------------|---------------------------------------------------------------|
| Andhra Pradesh    |                                                        130599 |
| Arunachal Pradesh |                                                          4386 |
| Assam             |                                                          7856 |
| Bihar             |                                                         48674 |
| Chhattisgarh      |                                                         16810 |
| Delhi             |                                                          8801 |
| Goa               |                                                         21959 |
| Gujarat           |                                                         53717 |
| Haryana           |                                                         99212 |
| Himachal Pradesh  |                                                         91682 |
| Jammu & Kashmir   |                                                         17176 |
| Jharkhand         |                                                          9250 |
| Karnataka         |                                                         83987 |
| Kerala            |                                                        441589 |
| Madhya Pradesh    |                                                         48723 |
| Maharashtra       |                                                         68532 |
| Manipur           |                                                          5849 |
| Meghalaya         |                                                          2872 |
| Mizoram           |                                                          6915 |
| Nagaland          |                                                          3800 |
| Odisha            |                                                         25389 |
| Punjab            |                                                        216524 |
| Rajasthan         |                                                         72453 |
| Sikkim            |                                                         78878 |
| Tamil Nadu        |                                                        100266 |
| Telangana         |                                                         84423 |
| Tripura           |                                                           386 |
| Uttarakhand       |                                                         40573 |
| Uttar Pradesh     |                                                         69794 |
| West Bengal       |                                                         10333 |
| A & N Islands     |                                                         17114 |
| Chandigarh        |                                                         43133 |
| Dadra & N. Haveli |                                                         46317 |
| Puducherry        |                                                        205675 |
| All-India         |                                                         70580 |

Source: NSSO 70 th Round, Key Indicators of Debt and Investment in India (2014)

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