8.38 ndian onom
(iv) Being environment friendly, nontoxic share of long-term credit in agriculture
and cost effective, bio-pesticides need needs to be arrested and reversed.
to be promoted among small farmers to (iii) There is regional disparity in the
improve productivity in agriculture. distribution of agricultural credit. The
coverage is very low in the north-eastern
AGrI-credIt & FArmer’s suIcIdes and eastern regions of the country.
Agricredit is an important mediating input for (iv) Crop Loans being short-term (for less
agriculture to improve productivity. Access to than 15 months) in nature are meant
to meet the current expenditure till the
institutional credit enables the farmer to enhance
crop is harvested fail to promote major
productivity by investing in machinery and
investments in agriculture. Farm loans
purchase of variable inputs like fertilizers, quality
upto Rs. 3 lakh are disbursed at an
seeds, and manure and providing funds till the
interest rate of 7 per cent per annum
farmer receives payment from sale of produce,
(effective interest rate becomes 4 per
which is at times delayed and staggered. Input
cent after 3 per cent interest subvention).
use by farmers is sensitive to credit flows to the
For the fiscal 2017-18, farm credit has
agriculture sector. Some of the concerns regarding
been increased by the Union Budget
agri-credit are as given below.
2017-18 to Rs. 10 lakh crore (which was
(i) Predominance of informal sources of Rs. 9 lakh crore for the year 2016-17, as
credit: farmers still avail as much as 40 per per the Economic Survey 2016-17).
cent of the funds from informal sources –
26 per cent of the total agricultural credit fArmer’s suiciDe
flow from the local money lenders (highly
Bankruptcy and indebtedness have been cited as a
exploitative lenders).46 In respect of high
major cause for farmer’s suicides (around 37 per
interest rates, DBT may be considered to
cent of all suicides by the farmers) in the country in
replace subvention of interest rates. The
which local money-lenders were usually portrayed
intermediation and refinance model to
as the villain. But as per the latest NCRB (National
promote agricultural credit needs to be
Crime Records Bureau) data, 80 per cent of the
revisited and replaced with DBT that
farmers who committed suicides in 2015 due
shall subsidise the interest paid by the
to ‘bankruptcy or debts’ had borrowed money
farmer, instead of subsidising refinance from institutional sources (banks and registered
to financial institutions. microfinance institutions). Besides, the country
(ii) The ratio of agricultural credit to has seen a threefold increase in the famers’ suicide
agricultural GDP has increased from 10 due to bankruptcy and indebtedness (from 1163
per cent in 1999–2000 to around 40 per of 2014 to 3097 in 2015). In 2015, a total of 8007
cent by 2015–16. However, the share of farmers committed suicides due to various reasons.
long-term credit (for more than 5 years) It was for the first time that the NCRB categorised
in agriculture or investment credit has farmers’ suicides due to debt or bankruptcy based
declined from 55 per cent in 2006–07 to on the source of loans.
37 per cent in 2015–16. The decline in the Looking at the current scenario only the
46. NSSO, 70th Round data quoted by the Economic size of fund allocated by the government for
Survey 2015-16, Vol. 2, p. 110. agriculture credit does not look sufficient. India