There is need that agro-based industries should be separated from this loan provision and they should be made provision from the quota of the industrial sector
By Prabhakar Kulkarni
Agriculture in rural areas and industrial activities in urban areas are the two main economic fields which needed special consideration in national interests. While the industrial sector was given the required priority, the agriculture was neglected completely. The Congress which ruled the country for more than fifty years and despite the long period of its rule it failed to consider the vital agriculture sector on priority basis and that too as an economic activity rather than as a vote bank.
The British influence of industrial and corporate culture had an impact on national policy initiated by the then Congress government and even later in period of alliance governments of UPA and NDA. The Congress created a culture of co-operative sector in which a chain of co-operatives was created for providing credit to agriculture as also create agree-based industries in rural areas. While this structure and the agro-based industries like sugar co-operatives and district central co-operative banks, these provided some relief but without the basic amenities and credit facilities and other marketing network for production and profitable marketing of produce with profit by prices based on cost of production. As the main aspect of improvement of plight of farmers was neglected, the aggrieved farmers were united and formed organizations in various states in the country. These organizations assembled and staged demonstrations a few months ago at Delhi.
The severity of the farm distress and crisis was more focused when recent ‘long March’ from Nasik to Mumbai was successfully carried out and Maharashtra government positively responded to the farmers demands. The farm sector has now assumed significance from both the political and economic point of view. The Mumbai Morcha received national media coverage perhaps because of the Mumbai’s significance as a financial capital of India and also a global center of international financial and investment activities. Besides news coverage, the nationals print media has focused on the farm sector issues, though with limited in-puts in their editorial space with a so far neglected comment and demand for ‘ease of business for agriculture” at par with the industrial sector.
The Union government has provided Rs11 lakh crores to be provided to farmers in the country as loans. But the budgetary provision may not be actually made available to the needy farmers. Because how and in what way and to whom the loans are to be given is not made clear. Farm sector comprises of farmers, sugar and farm-based industries and dairy societies. If bulk of the loan amount is being provided to agro-based industries from the provision of the quota, large number of farmers in the small sector who are more than 70 percent in the country will be as neglected as they are today.
The agro-based industries should be separated from this loan provision and they should be made provision from the quota of the industrial sector. The small and marginal farmers in majority should be provided with loans under various categories like crop loans, medium term loans and cash credit for current expenses. No such provision is at present made available in the farm sector and that too for individual farmers. Again loans are expected to be provided from nationalized, private and co-operative banks. But nationalized and private banks are not ready to provide farm loans in various categories. They offer loans to agro-based industries like sugar mills and dairy societies and finish the quota with excuse to individual farmers that their farm loan quota is finished.
The only alternative is the co-operative sector. Here the chain system is so complicated and screwing farmers that he is compelled to be trapped in distressed loan trap and consequent bouts of depression. Because the loan amount with interest is percolated from Union government to the village co-operative society and the chain system is a screwing mechanism turning farmers in debt trap with high interest burden.
For instance the Union government provides the amount to NABARD (National Bank for Agriculture and Rural Development) with 2 percent interest and then it is offered to the state co-operative bank adding again 2-3 percent. Then the state co-operative bank offers to the district central co-operative bank with added interest and when provided to village co-operative society the rate of interest turns to 14 percent. Due to the chain system even though the Union government boasts of providing loan to farmers with 2 percent interest, actually farmer get loan at 14 percent.
In Maharashtra farmers who are thus trapped in an inflated rate of interest and the the distressed loan circle.For instance if a farmer gets term loan of Rs. 3 lakhs which he gets only from a rural co-operative credit society and not directly from the district central co-operative bank or any other bank directly, the interest trap of 14 percent cannot be avoided. So the first yearly installment of loan amount and interest of Rs. 42 thousands is clubbed and is directly taken from whatever he gets from his cane bill or any other crop income. If he gets Rs.one lac from crop income the whole amount is debited to his loan account and he gets nothing cash for his other expenses and payment of dues to be paid to others involved in the cultivation process. As he has no alternative facility of cash credit or o/d facility he is left without any cash transaction. Despite his asset value of land of more than three crores, he is left without any cash and any other source. What then is the alternative other than to turn to a private money lender?
The very system is thus created without any affordable credit facility to farmers. If no loan facility is made available due to the prohibitive system, the urgent measure is to change the system without any delay. The first is that all amount earmarked in the budget as 11 thousand crores should be made available to vast number of individual farmers and not agro-based industries which should be clubbed under industrial finance. The intervention of NABARD and state co-operative banks should be removed and the amount should be directly given to the district Central co-operative banks (DCCs) with two percent interest and then to the rural co-operative society with additional two percent with the result that a farmer should get adequate loan at 4 percent interest. Even this 4 percent should be borne by the state government as is claimed to be followed by Rajastan government so that farmers would get interest-free loans.
But instead of changing the system and providing urgent relief to farmers their vote bank is more considered on priority basis and farmers’ movement is being exploited for motivating their vote strength in favor of the ruling BJP government. The divided farmer’s organization is battling against each other while Congress is being a target for its failure to do the required provision in farmer’s interest even during their larger tenure of ruling the country. NCP’s Sharad Pawar who was Union agriculture minister in the UPA regime and is now quite expressive against the BJP is keeping mum when the BJP asks as to why he did not accept recommendations of Swaminathan commission for which he is now agitating. Thus unless some solid and permanent, systemic provision is made, without only exploiting farmers for vote bank, farm distress will be continued without break.