Commercial banks have aggressively extended loans to farmers. But the money is being used for purposes not even remotely related to agriculture. By ASIF AHMED
“A man, who has never sown seeds in the scorching heat in the month
of June, will never know what real summer is. And a man, who has never watered his fields in the chilly winters of December, may never know what winters mean,” said the late Rajesh Pilot, a former cabinet minister, while addressing a rally of thousands of farmers years ago. The 60-year old Bhopal Singh, a resident of the fertile area of Khanpur village in the holy land of Haridwar district, remembers that speech quite clearly.
Pilot was right. For the Indian farmer, life had never been as tough as it is today. Ironical, I thought, as I gazed at the paddy fields in Khanpur, which were simply amazing. They were like green carpets or huge golf courses spread over bighas and bighas of land. But what was difficult to understand was the reason why the average Indian farmer is buried under huge debt even after 60 years of Independence, why can’t he send his son/daughter to a primary school, and why his annual crops fail to bring a smile to his face.
Even today, despite the rise of manufacturing and services sectors, agriculture has a dominant role to play in the Indian economy. Despite a decline in its share in GDP, it provides livelihood to nearly two-thirds of our population. Besides, agriculture provides raw material for industrial growth. Enough has been said on the issue, but not enough has been done to give a push to agriculture which, if accelerated, can actually propel the annual GDP growth to double digits. The 11th Plan document calls for agriculture growth of 4%, but the sector has hardly seen any capital investments and, over the past five years, the sector has witnessed a CAGR of a mere 2.3%.
One thing that Indian farmers need desperately is ‘credit’, and to the credit of the UPA government, it has considered it to be a top policy priority. According to the RBI’s latest annual report, the credit flow to the agricultural sector exceeded the target for the third consecutive year in 2006-07. Credit flow from commercial banks to the agriculture sector during the current financial year is likely to touch Rs.2,40,000 crore, as against the target of Rs.2,25,000 crore, union finance minister P. Chidambaram recently said that the figures were impressive even at the micro level. We decided to check out if this was indeed true.
“As the lead bank in Haridwar district, it is the responsibility of our bank to act as a coordinator between the bankers and government machinery. It is our responsibility to implement all the government-sponsored schemes, which are operating in the district as well as pinpoint and rectify any problems in the credit-delivery mechanism. Not only have we achieved the government objectives, in most of the cases, we have even surpassed the targets by significant margins,” says a bank officer, who’s in charge of the lead bank’s (Punjab National Bank) branch office in Haridwar district. In an attempt to give a push to credit delivery in India, the Punjab National Bank recently organised a loan mela (it was actually called a camp as the Reserve Bank of India has asked banks to refrain from using the word ‘mela’ as it diluted the event’s image) in Haridwar to clear all funds for the government-sponsored schemes that were pending in various branches. The idea was to help the banks in the region to achieve targets in different schemes before the closure of FY08. “The effort was worth it as a total of 450 borrowers were sanctioned loans worth Rs.3.5 crore,” the manager adds.
“The situation has improved, since manager sahib came to our branch,” feels Karam Singh, a farmer in his late forties. Short-term credit, which has a repayment period of one year, is disbursed through KCC (Kisaan Credit Cards), which has become the lifeline of small farmers. “Through KCC, we are now able to repay our debt, meet our day-to-day expenses, build pucca houses, and use the credit for marriage purposes,” was a constant refrain one heard from almost all the farmers we met in the area.
“A man, who has never sown seeds in the scorching heat in the month
of June, will never know what real summer is. And a man, who has never watered his fields in the chilly winters of December, may never know what winters mean,” said the late Rajesh Pilot, a former cabinet minister, while addressing a rally of thousands of farmers years ago. The 60-year old Bhopal Singh, a resident of the fertile area of Khanpur village in the holy land of Haridwar district, remembers that speech quite clearly.Pilot was right. For the Indian farmer, life had never been as tough as it is today. Ironical, I thought, as I gazed at the paddy fields in Khanpur, which were simply amazing. They were like green carpets or huge golf courses spread over bighas and bighas of land. But what was difficult to understand was the reason why the average Indian farmer is buried under huge debt even after 60 years of Independence, why can’t he send his son/daughter to a primary school, and why his annual crops fail to bring a smile to his face.
Even today, despite the rise of manufacturing and services sectors, agriculture has a dominant role to play in the Indian economy. Despite a decline in its share in GDP, it provides livelihood to nearly two-thirds of our population. Besides, agriculture provides raw material for industrial growth. Enough has been said on the issue, but not enough has been done to give a push to agriculture which, if accelerated, can actually propel the annual GDP growth to double digits. The 11th Plan document calls for agriculture growth of 4%, but the sector has hardly seen any capital investments and, over the past five years, the sector has witnessed a CAGR of a mere 2.3%.
One thing that Indian farmers need desperately is ‘credit’, and to the credit of the UPA government, it has considered it to be a top policy priority. According to the RBI’s latest annual report, the credit flow to the agricultural sector exceeded the target for the third consecutive year in 2006-07. Credit flow from commercial banks to the agriculture sector during the current financial year is likely to touch Rs.2,40,000 crore, as against the target of Rs.2,25,000 crore, union finance minister P. Chidambaram recently said that the figures were impressive even at the micro level. We decided to check out if this was indeed true.
“As the lead bank in Haridwar district, it is the responsibility of our bank to act as a coordinator between the bankers and government machinery. It is our responsibility to implement all the government-sponsored schemes, which are operating in the district as well as pinpoint and rectify any problems in the credit-delivery mechanism. Not only have we achieved the government objectives, in most of the cases, we have even surpassed the targets by significant margins,” says a bank officer, who’s in charge of the lead bank’s (Punjab National Bank) branch office in Haridwar district. In an attempt to give a push to credit delivery in India, the Punjab National Bank recently organised a loan mela (it was actually called a camp as the Reserve Bank of India has asked banks to refrain from using the word ‘mela’ as it diluted the event’s image) in Haridwar to clear all funds for the government-sponsored schemes that were pending in various branches. The idea was to help the banks in the region to achieve targets in different schemes before the closure of FY08. “The effort was worth it as a total of 450 borrowers were sanctioned loans worth Rs.3.5 crore,” the manager adds.
“The situation has improved, since manager sahib came to our branch,” feels Karam Singh, a farmer in his late forties. Short-term credit, which has a repayment period of one year, is disbursed through KCC (Kisaan Credit Cards), which has become the lifeline of small farmers. “Through KCC, we are now able to repay our debt, meet our day-to-day expenses, build pucca houses, and use the credit for marriage purposes,” was a constant refrain one heard from almost all the farmers we met in the area.
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