Mourn
AP's plight brings into sharp focus India's agrarian crisis. The sorry state of institutional credit, consigned to the dustbin, is back on the agenda. The Union government has promised to double institutional credit available to the farm sector. In AP, institutional credit accounts for a mere 20-25 per cent of the farm credit requirements. How will this proportion change?
Crucially, the proportion of small loans (below Rs 25,000, mostly to small and marginal farmers) has been falling since the 1990s. Will the banks' service to these sections improve, or will now-increased credit flow to rich farmers, as is usual? Will banks invest in the small farmer, given the burden of non-performing assets? Banks can't provide loans to tenant farmers at all right now, and they have been requesting governments to conduct a land survey and devise instruments to formally recognise tenant farmers and share-croppers. This has to be taken up as a priority. Contract farming has been often proposed as an option. But that is a business scenario, and for it to be on level terms, the farmer must have more bargaining power at his disposal.
A lot has been said of the self-help groups (SHGs) of Andhra Pradesh. Did they fail the distressed farmers? It seems the scale of credit they offer can't provide for the rising costs of agri-inputs. The real challenge is in making agriculture a reasonable livelihood proposition. Till this happens, all talk of increased credit and moratoria on debt recovery is pointless. Right now, the farmer needs financial support. But to ensure this crisis doesn't continue, one area that needs immediate attention is the cost of cultivation. The
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