Lok Sabha Question No. 3493 (UNSTARRED), answered on 2017-08-08
Subject: Reduction in Premium on Farmers’ Debt
Ministry: AGRICULTURE AND FARMERS WELFARE
Asked by: (ADV.) JOICE GEORGE

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

## LOK  SABHA UNSTARRED QUESTION NO. 3493

TO BE ANSWERED ON THE 8 TH   AUGUST, 2017

## REDUCTION IN PREMIUM ON FARMERS' DEBT

3493.  ADV. JOICE GEORGE:

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

- (a) whether many of the States have resorted to unethical practices to reduce their premium burden due to farmers' debt trap;
- (b) if so, the details thereof, State-wise;
- (c) whether  the  Government  is  planning  any  centralized  mechanism  to  manage  the  debt issue of farmers;
- (d) if so, the details thereof; and
- (e) whether the State Governments have requested the Union Government to intervene in the matter and if so, the details thereof?

## ANSWER

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

कृ ष एवं कसान कयाण मंालय म राय मंी (SHRI PARSHOTTAM RUPALA)

- (a) & (b):  No, Madam. No such incidence has been reported in this regard.
- (c) to (e): To  manage  the  debt  issues  of  farmers,   the  Government  has  undertaken  the following centralized mechanisms:
1. Reserve  Bank  of  India  (RBI)  vide  its  master  circular  dated  1 st July  2015  on 'Priority Sector Lending - Target and Classification' have fixed 40 per cent of Adjusted Net Bank Credit (ANBC) under priority sector lending for all scheduled commercial banks operating  in  India  of  which  18%  target  is  for  agriculture  sector.   18  percent  of  ANBC/ Credit  Equivalent  Of  Off-Balance  Sheet  Exposure(CEOBE),  whichever  is  higher  within the 18 percent target for agriculture, a target of 8 percent of ANBC/CEOBE, whichever is higher is prescribed for Small and Marginal Farmers, to be achieved in a phased manner i.e., 7  per  cent  by  March  2016  and  8  per  cent  by  March  2017.Foreign  banks  with  20 branches and above have to achieve the Agriculture Target within a maximum period of five  years starting from April 1, 2013 and ending on March 31, 2018 as per the action plans submitted by them and approved by RBI. The sub-target for Small and Marginal farmers  would  be  made  applicable  post  2018  after  a  review  in  2017.  Scheduled commercial  banks  having  any  shortfall  in  lending  to  priority  sector  shall  be  allocated amounts for contribution to Rural Infrastructure Development Fund (RIDF) established

with  NABARD  and  other  funds  with  NABARD/National  Savings  Bank  (NSB)/  Small Industries Development Bank of India (SIDBI)/ Micro Units Development and Refinance Agency (MUDRA) ltd., as decided by RBI from time to time. The interest on banks' for contribution to RIDF or any other Funds, tenure of deposit etc shall be fixed by RBI from time to time.

2. Kisan  Credit  Card  (KCC)  Scheme  an  innovative  credit  delivery  mechanism  to meet production credit requirement of farmers in a timely and hassle-free manner, has since  been  simplified  by  providing  the  farmers  with  Automatic  Teller  Machine  (ATM) enabled debit card based on one-time documentation, multiple drawals within the limit and built-in cost escalation in the limit, etc. The credit limit/ loan amount under KCC is fixed by Banks as per guidelines issued by RBI. The short term credit limit under KCC for the first year is determined based on Scale of Finance for the crop (as decided by District Level  Technical  Committee)  x  Extent  of  area  cultivated  +  10%  of  limit  towards  postharvest/household/  consumption  requirements  +  20%  of  limit  towards  repairs  and maintenance  expenses  of  farm  assets  +  crop  insurance  and/or  accident  insurance including  personal  accidental  insurance  scheme  (PAIS),  health  insurance  and  asset insurance. The limit for second and subsequent years (3rd, 4th and 5th year) is arrived based on first year limit for crop cultivation purpose plus 10% of the limit towards cost escalation  /  increase  in  scale  of  finance  and  estimated  term  loan  component  for  the tenure of KCC, i.e., five years. The short term loan limit arrived for the 5 th year plus the estimated long term loan requirement will be the Maximum Permissible Limit (MPL) and is to be treated as the KCC limit.

3. To ensure credit to the agricultural sector, the Government sets annual targets for flow  of  credit  to  agricultural  sector  taking,  inter  alia,  into  account  the  overall  banking credit growth. Target for flow of agricultural credit has increased from Rs. 3,25,000 crore in 2009-10 to Rs. 10,00,000 crore in 2017-18. The achievement vis-à-vis the targets was Rs. 3,84,514 crore and Rs. 10,65,755.67 (Provisional as on 31.03.2017) in these years respectively.

4. The Government also provides interest subvention on short-term crop loans upto Rs.3 lakh which is available to farmers at the interest rate of 7% per annum. In case of timely  repayment,  additional  incentive  of  3%  interest  subvention  is  allowed,  thereby reducing the effective interest rate to 4% per annum.

5. Requests  for  financial  assistance  to  cater  to  the  needs  of  the  farmers  were received from or on behalf of Tamil Nadu, Telangana and Uttar Pradesh. However, as per the extant policy of RBI, there is no scheme for waiver of loans of farmers.

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