Maharashtra chief minister Devendra Fadnavis.
Maharashtra chief minister Devendra Fadnavis.

Fresh farm crisis brews in Maharashtra as banks tighten purse strings

Banks in Maharashtra have issued only 22% of the kharif season lending target of Rs43,342 crore till 27 June, said an official at the state department of cooperation

Mumbai: Farm discontent is raising its head in Maharashtra yet again as banks remain tight-fisted on crop loans at the beginning of the sowing season, cancelling out the benefits of last year’s mega loan waiver.

Banks in Maharashtra have issued only 22% of the kharif season lending target of Rs43,342 crore till 27 June, said an official at the state department of cooperation. June, incidentally, is the most critical month in the farm cycle when the farmers need money to procure seeds and begin sowing.

Last year’s Rs34,022 crore loan waiver was designed to clear the dues in defaulted farm loans and make farmers eligible for loans again. That process seems to have been delayed.

The kharif season crop credit disbursement this year was 5% below the corresponding period in 2017, said the official quoted above.

“By 30 June 2017, banks had achieved 27% of the kharif target. This was before the farm loan waiver kicked in. It was announced on 24 June last year but since the implementation took a long time, it did not immediately make the indebted farmers eligible for fresh credit. But we were expecting a higher credit disbursement this kharif since the loan waiver should have ideally made several farmers eligible for fresh credit," the official said requesting anonymity.

Last year’s loan waiver, which had a cap of Rs1.5 lakh came after strong protests, and a similar waiver by the new Bharatiya Janata Party (BJP) government in Uttar Pradesh. Through an online system based on biometric identification, the state government identified nearly 5.6 million farmers as eligible beneficiaries.

The official cited above said that by 31 May this year, the government deposited around Rs24,500 crore in nearly 4.8 million farmers’ bank accounts.

“The government has so far transferred money into the accounts of nearly 4 million farmers and banks need to clear these accounts now. We expected that the accounts that have been cleared for loan waiver benefits would become eligible for fresh credit. That does not seem to have happened," the official said.

The dismal credit coverage has already caused some consternation for the Devendra Fadnavis-led BJP government. Last week, Fadnavis wrote to Union finance minister Piyush Goyal, requesting him to direct banks to increase crop loans in Maharashtra.

In Vidarbha and Marathwada, the two regions where the farm crisis has been most severe, farm activists say the lack of formal crop credit is forcing farmers to approach licensed moneylenders who charge a higher rate of interest.

Yavatmal-based farm activist Kishore Tiwari has sought the intervention of Prime Minister Narendra Modi.

“Banks have resorted to harassment of farmers seeking loans. Despite clear instructions by the chief minister on 5 May that banks should clear the accounts of at least 80% farmers eligible for loan waiver before 31 May so that they can apply for fresh loans, only 22% of the targeted credit has been issued so far. The situation is more critical in 14 districts of Vidarbha and Marathwada and the Prime Minister needs to intervene now," Tiwari told Mint.