The Hindu : New Delhi News : Punjab farmers neck-deep in debt: study

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Wednesday, Sep 12, 2007
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New Delhi

Punjab farmers neck-deep in debt: study

Total indebtedness is more than 50 p.c. of the NSDP from agriculture and livestock

Farmers are increasingly becoming dependent on commission agents for credit needs
Contrary to the perception of many, per capita income of Punjab farmers are on decline

New Delhi: Farmers in Punjab, the most agriculturally advanced State in the country, are neck-deep in debt to the tune of around Rs. 24,000 crore, a report prepared by the State Government has said.

“The total indebtedness is around Rs. 24,000 crore, which is more than 50 per cent of the Net State Domestic Product (NSDP) from agriculture and livestock,” said the State of Environment Report 2007 submitted to the Union Environment Ministry.

Both institutional and non-institutional credit share equally the total debt.

The report said farmers were increasingly becoming dependent on commission agents.

“As proved by results of various studies and surveys, besides institutional sources of credit, non-institutional sources, mainly commission agents also meet around 50 per cent credit needs of the farmers in the State,” the report said.

The success of Green Revolution and consequent rise of per capita income of farmers has affected the socio-economic fabric of the State, it said giving vivid picture of the agricultural economy of the State.

“It has led to high expenditure life styles, dependence on external farm labour and little esteem for farming as a profession, especially amongst the young,” the report said while attempting to explore the reasons for the financial downfall of the majority of Punjab farmers.

The outstanding institutional loans of farmers in Punjab have increased steeply to Rs. 1240 crore by the end of 2005-06 representing more than 38 per cent of NSDP from agriculture sector, the report said quoting the provisional figures compiled by Punjab State Financial Corporation.

It said the institutional credit was Rs 6,206 crore in 2000-01 and Rs 1,863 crore in 1990-91.

Contrary to the perception of many, the report pointed out that per capita income of Punjab farmers are on decline. The per capita income in agricultural sector declined from Rs 12,375 in 2001 to Rs 11,587 in 2004.

Vicious cycle

“Because of declining trend in farmers income in the State, a large number of marginal and small farmers have been pushed into the vicious cycle of debt,” it said.

The small farmers have been borrowing mostly from non-institutional sources to fulfil their social obligations and bridge the gap between income and expenditure.

Loans for farming included borrowing for capital investment purposes like tractors, tubewells, farm chemical inputs, seeds and other social needs.

The report also brought the fact that prices of farm inputs such as seeds, fertilisers, pesticides, diesel and labour are soaring on one hand and farm yield and income are declining on the other on account of low MSP of food grains, receding water table and soil erosion.

For instance, diesel rate shot up by 85 per cent to Rs 32.33 per litre in 2006 from Rs 17.5 per litre in 2002, the report said. -- PTI

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