The Hindu Business Line : `Govt must set sub-targets for farm credit'

THE Government should set sub-targets for agricultural credit to ensure that credit requirements of small and marginal farmers, including tenants, who account for nearly 80 per cent of the holding and one-third of the area operated on, are met through institutional sources, according to Prof C.H. Hanumantha Rao, member of the National Advisory Council and Chairman of the Centre Economic and Social Studies.

Addressing the inaugural session of a round-table conference of parliamentarians on credit to agriculture in India here on Friday, Prof Rao said although 60 per cent of the credit requirements of farmers was met by institutional sources, small and marginal farmers continued to depend heavily on informal sources such as local money lenders.

In fact, the farmers who had committed suicide were those who had not been able to borrow from institutional sources.

Prof Rao said he was not impressed by the Government's target of doubling institutional credit to agricultural sector in three years. "We are setting national targets without getting to the aspect that the big and influential farmers are the major beneficiaries of the increased credit flow. Hence, we have to set separate targets for catering to the credit requirements of small and marginal farmers," he said.

The two-day round-table is being held by the Administrative Staff College of India. Apart from parliamentarians representing the Standing Committees of Finance, Agriculture and Rural Development, ministers dealing with these portfolios in different States, top functionaries of RBI, NABARD, SBI and GIC, representatives of the Ministry of Finance and non-government organisations are taking part in the conference.

Prof Rao said studies revealed that defaults in loan repayment were greater among big farmers than small farmers.

He was not sure that crop insurance could reduce the risks as "insurance works only when premium is very less and only few people suffer losses. The premium would be high if everybody has to be compensated."

The Chairman of ASCI Court of Governors, Mr M. Narasimham, emphasised the need for revitalising co-operative credit institutions by de-politicising and de-bureaucratising the organisations.

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