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Farm credit rises but number of takers fall: Assocham-CACL

Farm credit rises but number of takers fall: Assocham-CACL
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First Published: Mon, Feb 18 2008. 04 31 PM IST
Updated: Mon, Feb 18 2008. 04 31 PM IST
New Delhi: Farm credits during the last three years have increased significantly though number of farmers availing them (including Kisan credits) have gone down . This is despite regional rural banks and other cooperatives banks aggressively launching / promoting farm credits within their respective jurisdiction.
The above findings are part of a study jointly conducted by industry chamber Assocham and Concept Agrotech Consultants Limited (CACL) on “Farm credit : an introspection” revealing that the percentage share of allocation of agriculture and allied sectors has been constantly on the decline for the last several years.
Key Findings
* From 2000-01 to 2002-03, though farm credit increased from 8.4% to 10.2% as percentage of agri-GDP, subsequent years witnessed a decline, touching 8.7% in 2004-05; gross capital formation in percentage of GDP decreased from 2.2% in 2001-02 to 1.7% in 2004-05
* Apart from decline of agricultural output of the country, amount of gross capital formation has slowed down
* Agriculture credit has been increasing around 14% annually, during the last three years when farm credit got tremendous boost and received Rs80,486 crore in 2005-06 and increased to Rs2,03,297 crore following year; in the first 10 months of current fiscal, farm credit touched Rs1,20,062 crore
* Number of persons receiving credit has been declining: in 2004-05, 4.13 crore people received farm credit which dropped to 3.85 crore (2005-06), marginally increasing to 3.97 crore in following year and 2.78 crore till October 2007; number of kisan credit cards issued registered significant decline from 96.80 lakh in 2004-05 to 80.12 lakh in 2005-06
* Rural sector could have benefited from increased farm credit under total acerage in the country, however, there has not been much increase in total acerage in 2005 as compared to 2004 when total acerage was 161.5 million hectares which marginally increased to 165.1 million hectares in 2005
* Number of farmers’ suicides remains unabated; according to data from National Crime Records Bureau, 1,66,304 farmers committed suicides in the decade following 1997
* Share of North Eastern states in the total share of credit is meagre
* No new breakthrough technology in farm sector has come in the last few years; there is not much focus on creating infrastructural facility for farmers and small / small scale farming continues to languish
* Rural indebtedness has increased; in the event of farmers not being able to pay back, there can be significant write-offs by the government which may affect the economy
* Indian farmers have not been able to take advantage of the increase in international price and farmers continue to grow crops that are largely supply driven rather than based on actual demand from consumers; also agriculture value chain is yet to be fully integrated
* Rural credit is getting siphoned off by farmers for nonfarm related purchases, one of which is buying livestock
* Cost of cultivation and farming is increasing on a large scale and is appearing non remunerative to a large section of small and medium farmers with rural credit not fully utilized in farming activities
* There is no significant investment of credit on installing facilities like micro irrigation and other improved facilities
* Banking should be taken as far as possible to farmers’ doorsteps using modern convergence technologies; people find it difficult to come to banks to open new accounts
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First Published: Mon, Feb 18 2008. 04 31 PM IST