Agricultural credit growth and its defective operation. in India

Agricultural credit growth in India

Agricultural credit growth in India

By Prof Ghulam Mohyuddin. Wani

Agricultural credit in India has been in vogue since ages. The bunya bewpari system prevailing in rural India was one of the oldest hoarding systems. The cultivator used to borrow from traders prior to cropping season and return the sun in cash or in kind at harvest. The lender will keep farmers land on mortgage too. At times minor gold ornaments too were mortgaged to get few buck on loan .Most of the rural loans were spent either on purchase of a bullock, seeds or even for marriages of sons and daughters.

This system even now exists .Its intensity has of course decreased and mitigated with availability of more credit from banks at easy rates. The agricultural credit has been growing but is still not functioning in tribal arrears and baseline communities.

The corruption and paper works scrums a good percentage of people in farm sector to be exploited by the money lenders. Here we shall present figures on the agricultural credit growth in India.

The agriculture credit in 2003-4 was 4470 crores.It was 12084 in 2006-7.Thus a 170% INCREASE is big. Its share is in all banks and banking systems. We have now 69 lakh kisan credit cards till dec, 2008.

Let us analyse the figures.

We have 136 lakh land holders or farmers who practice farming. The total requirements are some 20500 crores.At present we have a link of 13600 crores.Thus actual distribution in 2007-8 was lower than needed .It was around nine thousand crores.Thus needed and spend is at disparity and thus a portion of credit flows from the private lenders.

Among 136 lakh farmers only 69 lacks have kisan credit cards. Then the potency and success of Kisan credit cards is yet to be analysed. It is my experience it may not be 100% success. The success rate may vary from 20 to 60% in India. However the figures are to be corrected and arearbitery .

Thus one point is clear the credit available may not be real but a mutilated one. Crop credit increased from 7163 cr to 9143 cry(2006-2008) decreased to 6778 cores in 2008-9.Thus indicating the malfunctioning of the entire system under agricultural sector.

The main reasons are said to be as.

1. A corrupt leadership. It is said on the national scene the corrupt practices have crept into the selection process of ICAR, agricultural department since last few decades. It started with Rao brinder as minister and continued and increased with the present incumbent in power. The mashalkar commission report was brushed aside the agricultultural university system, ICAR-ARS system are in jeopardy and in deep corruption racket. The present DG was refused the assignment on one or other pretext for long. One GuJar borwa was almost denied. his due like many capablle and meritorious one,needs CBI enquiry.

2. The banking system does and don'ts are knots difficult to lose.

3. The cooperative credit fell from 84% target to 39%

4. Out of 136 lakh farmers 100 lacks are illegible for loans but a merry few get it.

5.The 7800 cr debit waiver is not a healthy economic preposition when most of the poor farmers complain of irregularities.

6. Additional interest waiver 1%, Low rates of loans too do not operate without blemish 4% rebate to regular payer up to Rs 25000, 2% rebate beyond Rs 25000 up to Rs 3 Lakh; Rs. 50 cr provided every year to cooperatives. All these initiative are for big, commercial farmer friendly and not poor farmer operative systems.

The Indian agricultural growth may tremble of its own weight because.

1. Wrong policies of the Govt to benefit specific industries, like sugarcane growers as they are favourites or corporate of the Union minister as alleged in news papers. The use of ethanol and its extraction from sugarcane is preferred. The sugar is imported to Benet the lobby to have more profits.

2.The credit flow to prospective apple growers in Jammu and kashmir, or vegetable production incentives for marketing are not forthcoming.Thu a regional bias in credit distribution aims at economic black outs.

3. The credit to farmers remain unutilized by many banks due to lack of expertise and needs agricultural expert support.

Agricultural credit growth and its defective operation. in India

By: Gulzar Anhmed Wani

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