The Hindu : National : Lists of eligible farmers put up but banks have no money

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Lists of eligible farmers put up but banks have no money

Special Correspondent

Over Rs. 9,000 crore needed for crop loans

MUMBAI: About 31 lakh farmers in Maharashtra will be eligible for the loan waiver as per lists put up all over the State, according to official sources. However, with banks facing a liquidity crunch, they will be unable to disburse loans unless the Centre bails them out.

The lists have been on display for the last five days at all bank branches. In Maharashtra there are 42 lakh bank accounts of farmers with less than five acres and 24 lakh with more than five acres. The National Bank for Agriculture and Rural Development (NABARD) last week decided to ask the Centre to disburse an advance as soon as possible so that banks can give fresh loans.

Shetkari Sanghatana leader Vijay Jawandia told The Hindu that when the government announced the loan waiver in February it should have made arrangements to provide the funds at least by May-end. Once again farmers were at the mercy of traders who would set the price for the produce and also not give farmers a choice of seeds or fertilizers, he pointed out.

Maharashtra needs over Rs. 9,000 crore in crop loans for both kharif and rabi this year, official sources said. Banks are faced with major liquidity problems which can be sorted out only once the Centre releases funds, according to official sources who wish to remain anonymous. The issue was discussed, among other matters, last week at a meeting between the Maharashtra government and NABARD.

The Centre is supposed to send 50 per cent of the loan waiver to the banks by September, which is too late. Official sources said that in Maharashtra in 2007-08, Rs. 16,000 crore was disbursed as agricultural credit, of which 60 per cent was for crop loans. On an average only 10 per cent of the amount has been recovered. Due to poor recoveries last year, the cooperative banks’ kitty is almost empty and they will find it tough to give fresh loans.

The main concern for the government is not how much credit has been waived but how much money can be disbursed to farmers. After the lists of eligible farmers are put up, there is a month to sort out grievances. NABARD has two schemes for loans. One is the short-term seasonal operation which involves refinancing, and the other is liquidity support. But without an advance from the Centre it is stuck.

The State government is also asking NABARD to give advance loans and not wait for the verification of the lists which is a cumbersome process involving rechecking and an audit as well. Compounding the problem is that farmers who have taken loans last year and defaulted will not be eligible for fresh loans. The Centre’s waiver only takes care of loans from 1997 till March 31, 2007.

While farmers with outstanding loans for 10 years benefit from the waiver, why deny fresh credit to farmers who have not repaid their loans only last year, official sources said. This is an issue which remains to be sorted out.

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