The Hindu Business Line : Chidambaram promises better credit flow to farmers

THE Government will go all out to ensure that farmers are weaned away from the clutches of moneylenders so that they increasingly rely on institutional mechanism such as scheduled commercial banks, regional rural banks and co-operative banks for credit requirements, the Lok Sabha was informed on Friday.

Responding to a volley of supplementary on the main question of loans to farmers during the question hour, the Finance Minister, Mr P. Chidambaram, said in the backdrop of the June 18, 2004 package for doubling the flow of credit to agriculture over three years, the agriculture credit disbursement during the current fiscal has logged "significant" growth compared to the previous year.

It is expected that Rs 1,08,500 crore would be disbursed in the current fiscal.

Mr Chidambaram said in the next fiscal, it was proposed to provide 30 per cent over and above the Rs 1,08,500 crore being provided in the current fiscal, against last year's provision of Rs 80,000 crore.

Of 10 crore farmers in the country, only four crore have access to institutional credit. This would increase to 4.60 crore in the current fiscal and another 50 lakh farmers would be brought under the formal mechanism.

"We are stepping up the number of farmers and also the volume of credit."

When Congress MP, Mr Janardhan Reddy, drew the attention of the Minister that banks do not implement the priority sector lending in general and for agriculture in particular, and cited the case of Bihar and Orissa where farm loans are just two per cent, Mr Chidambaram said due monitoring of farm loans by nationalised banks would be done.

"Banks are already providing loans to small and marginal farmers through self-help groups, tenant farmers groups and kisan credit cards," he added.

Necessary guidelines have been issued for debt relief to farmers in arrears, farmers in distress, treatment of account of rescheduling, one-time settlement scheme for small and marginal farmers, and guidelines on the scheme for redemption of debt of farmers from non-institutional sources.

When some members sought waiver of margin/security requirements for agriculture loans beyond Rs 50,000 as farming operations demand more credit, the Minister said that the existing parameters for classification of the non-performing loans do not allow this to be raised. However, he assured them that it would be taken up in due course.

In response to the demand for lower rate of interest on farm loans, the Minister said the State Government should address this issue as the loans disbursed by the banking system gets routed via various layers of administration before it reaches the farmers.

To another question on the formulation of national policy on subsidies, Mr Chidambaram said the Government proposed to evolve a national policy for targeting subsidies based on discussions and consultations with various stakeholders and after a careful assessment of impact of such a move on the consumers.

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