State Commission for Debt Relief of Small Farmers, Farm Workers and Rural Artisans asked Union Finance Minister Niramala Sitharaman to provide loans to struggling farmers in debt to lenders non-institutional and harvest loans to all farmers to maintain the engagement of at least half of the farming population during the COVID-19 pandemic.
In a letter to the Minister of Finance, Commission Chairman Pakala Srihari Rao said that during the current lockdown period, only the farming community is working in the fields relentlessly contributing to national food security, while all the other sections are confined to houses. . However, they suffer losses in the process and a majority of them have already landed in the debt trap of pawn shops paying exorbitant interest rates ranging from 36% to 48% per annum.
Stating that farmers constitute around 50% of the country’s population, Mr Rao said they need at least ₹ 1 lakh to ₹ 2 lakh as a long term loan without requiring any bond or collateral as expected for MSMEs and MUDRA. No bank has followed the RBI’s instructions to prioritize loans to farmers, although the umbrella bank has been advocating this since 2004, leaving a majority of the farming community at the mercy of pawn shops, he said. he noted.
As banks are not accessible to all, more than 20% of farmers have never used institutional credit in the form of harvest loans and among those who obtain harvest loans, the majority do not obtain credit for the harvest. ‘all of their land ownership or cultivation area. While a farmer owning 10 acres of land is entitled to 4 lakh yen as a harvest loan at the financial scale of 40,000 yen per acre, the banks penalized a maximum of only 1.6 lakh without asking for a bond. . They insisted on mortgaging farmland to obtain harvest loans above 1.6 lakh, Srihari Rao said.
The Commission Chairman asked the Minister of Finance to consider the request to prevent farmers from falling into the debt trap of private lenders by providing crop loans to all farmers and their entire acreage cultivated in order to overcome the current crisis.