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