Less takers for farm loans despite significant increase in credit

New Delhi, Feb 18 (UNI) Despite the endeavours of regional rural banks and other cooperatives banks to launch farm credits aggressively within their respective jurisdiction, the number of farmers availing such credits including kisan credit has gone down during the last three years.

A study jointly conducted by industry chamber Assocham and Concept Agrotech Consultants Limited (CACL) on ''Farm Credit: An Introspection'' has revealed that percentage share of allocation of agriculture and allied sector too is constantly on decline for the last several years.

Assocham President Venugopal N Dhoot said in a statement that from 2000-01 to 2002-03, though the farm credit increased from 8.4 per cent to 10.2 per cent as percentage of agri-GDP, in the subsequent years, it witnessed a decline and touch 8.7 per cent in 2004-05.

The gross capital formation in terms of percentage of the GDP decreased from 2.2 per cent in 2001-02 to 1.7 per cent in 2004-05.

Mr Dhoot said apart from the decline of the agricultural output of the country, the amount of gross capital formation is also on a downward path.

The chamber chief further pointed out that the agriculture credit has been increasing around 14 per cent annually, during the last three years farm credit got tremendous boost and received Rs 80,486 crores in 2005-06 and increased to Rs 20,3297 crores in the following year.

However, in the first 10 months of current fiscal, the farm credit touched Rs 1,20,062 crores.

The study observed that the number of persons receiving credit has been declining. In 2004-05, 4.13 crores people received farm credit which dropped to 3.85 crores (2005-06), marginally increased to 3.97 crores in the following year and 2.78 crores till October 2007.

It also said the number of kisan credit cards issued also registered a significant decline from 96.80 lakh in 2004-05 to 80.12 lakh in 2005-06.

The chamber said, ''the slow growth of agriculture, the wretched condition of the average farmers, unabated number of farmers suicides and inequitable growth of agriculture are areas of serious concern and challenges and, therefore, warrants a closer look and real impact of farm credit be assessed.'' The study said the rural sector could have benefited from increased farm credit under total acerage in the country.

However, there has not been significant increase in the total acerage of country in 2005 as compared to 2004. In 2004, the total acerage was 161.5 million hacteres which marginally increased to 165.1 million hectares in 2005.

More credit should have enabled more small and marginal farmers to increase their area under of cropping.

The study points out that according to data from National Crime Records Bureau, 1,66,304 farmers have committed suicides in a decade since 1997.

The share of the North Eastern states in the total share of credit is very meager and no new breakthrough technology in the farm sector has come in the last few years.

There is not much focus on creating infrastructural facility for the farmers and small farmers are in very bad shape.

The study said rural indebtedness has increased and how the farmers are going to pay back the money taken is a big question.

This may lead to significant write-offs by the government which in turn may affect the total economy.

The study also finds that Indian farmers have not been able to take advantage of the increase in international price with no evidence available till now that only credit can help improve the condition of the farmers.

Farmers are still growing crops which are largely supply driven rather than being based on actual demand from consumers. Moreover, agriculture value chain is yet not fully integrated and rural credit is getting siphoned off by the farmers for nonfarm related purchases one of which is buying of livestock.

Banking should be taken as far as possible to the doorsteps of the farmers using modern convergence technologies. Difficulty and the cost of coming to the banks are deterrent to the creation of new accounts, the study said.

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