Plan Panel for debt waiver for distressed farmers

New Delhi, May 12: To provide succour to the distressed farmers, Planning Commission today favoured a case by case waiver of unwilful defaulters among farmers, but warned that a general amnesty of interest rates to the community could have a disastrous impact on the economy.

Highly placed sources of Planning Commission said the last general waiver was done when Mr V P Singh was the Prime Minister and had dire consequences for co-operative credit, not to speak of the entire economy. The sources said that though this would not solve the problem, it would provide relief to some farmers at least.

The problem of indebtness among the farming community was huge and most farmers take loans from money lenders, who charge exhorbitant interest rates. These farmers would continue to suffer and, therefore, a better approach would be to tackle the problem at its roots by hiking the growth rate of the agricultural sector to at least four per cent.

The sources highlighted how there was great distress aamong the farmers and the poorer lot among them were not in a position to pay back ther loans for reasons beyond their control. It was, therefore, incumbent upon Commercial Banks that they adopt a more humanitarian and practical approach and grant a waiver to all unwillful defaulters.

"Arbitrary debt waivers are not desirable, but there is need for formal mechanisms at appropriate level to expedite One Time Settlement," they said.

The sources said farm credit has expanded significantly in recent recent years but outreach has not. The number of credit accounts is declining, particuarly small accounts.

They said promoting financial inclusion was a greater priority than the more popular demand for lower interest rates.

The sources said it was necessary on the part of State governments to implement the Vaidyanathan Committee Report. Early implementation could be promising.

They noted that both the Eleventh Plan and NDC Working Group have suggested steps towards Universal banking, including Group lending, and a rural credit information system that aims at Kisan Credit Cards for all. These steps need to be taken now, they said.

UNI