In FY19, farm loan NPAs jumped to 12.4% or at 1.1 trillion of the ₹8,79,000 crore of total bad loans in the system, up from ₹48,800 crore or 8.6% of the total NPAs of ₹5,6,6,620 crore in FY16, the report by SBI Research said.
"Even though agriculture NPA was only ₹1.1 trillion or 12.4% of the overall NPAs in FY19, if we accounted for ₹3.14 trillion worth of farm loan waivers announced in the last decade, agri NPAs/burden for the exchequer/banks could be as much as staggering ₹4.2 trillion and if the latest ₹45,000-51,000 crore of write-offs announced by Maharashtra (second in three years) this it could be at ₹4.7 trillion which is 82% of the industry level NPAs," the report claimed.
It can be noted that since FY15, ten of the largest states announced farm loan waivers worth ₹3,00,240 crore to alleviate the indebtedness of farmers and the spate of suicides. If the numbers announced by the Centre under Manmohan Singh regime in FY08 is counted, this goes up to around ₹4 trillion. Of this, over ₹2 trillion have been made since 2017.
In FY15 Andhra announced to write off farm loans worth ₹24,000 crore, in the same year Telengana too did so involving ₹17,000 crore. FY17 saw Tamil Nadu announcing write-offs of ₹5,280 crore.
FY18 witnessed Maharashtra writing off ₹34,020 crore; Uttar Pradesh ( ₹36,360 crore); Punjab ( ₹10,000); and Karnataka ( ₹18,000 crore), and another ₹44,000 crore in FY19.
In FY19, Rajasthan written off ₹18,000 crore, Madhya Pradesh ( ₹36,500 crore), and Chhattisgarh ( ₹6,100 crore) and Maharashtra's ₹45,000-51,000 crore announced last month is the latest.
But, it is entirely a different matter that most of these write-offs have been only in paper as actual write-offs have not been more than 60%, while the lowest delivery has 10% in Madhya Pradesh.
Another interesting finding is that the years when farm loans were written off, there has been a massive fall in fresh farm loan intake. For instance in FY18, when Maharashtra, Karnataka and Punjab announced farm loan waivers, the annual growth in fresh loan disbursement was a whopping (minus) - 40 per cent in Maharashtra, a paltry 1% in Karnataka and 3% in Punjab, the report noted.
Over the years, kisan credit cards have became one of the most popular for agricultural loans, mainly because of the interest subvention scheme and the 5 per cent incentive for prompt repayment incentive offered by the Centre (for up to ₹3 lakh per borrower).
At the end of March 2019, the KCC loans aggregated to about ₹6,68,000 crore constituting about 60% of the total agricultural loans.
Majority of our farmers are indebted because around 70% of the farm land is being cultivated by tenant farmers and not land-owning farmers, and hence is not entitled to getting any benefit, as being not the owner of the land.
Also, barring Kerala, which has enacted the Money Lending Act, protecting borrowers from usurious rates of interest that incidentally protected tenants from excesses in private debt, no other state offers such legal safeguard to farmers.