Course : - Holistic Coverage of Kisan Issues Lesson 5:- Problems and Solutions Credit and Insurance Presented by Nithin Kunneparambil
Farmer Suicides Maharashtra, Karnataka, Telangana and Andhra remains to be the hot spots of Farmer suicides. .Has been a crucial item issue in contemporary India. Reason behind suicides - DEBT Traps!!! Lack of marketable surplus produce b'coz of small landholding, lack of irrigation, high yielding seeds and other inputs, lack of coaching . Lack of remunerative prices (because of issues in APMC, MSP and transport- . Lack of financial inclusion and financial planning. (Because even after extension service) on best farming practices storage infrastructure good monsoon and good harvest, money may get wasted on social events and pilgrimage, if not saved and invested properly.)
How is that government is trying to deal with this? Loan Waivers Dangerous, many economist oppose to this. . Bad culture and examples been set. Against the farmer who pay loans regularly. Increases the Fiscal deficit of the government. . NPAs increasing and future loans seen with suspicion. . It is only for rich farmer, poor farmer still avail un-institutionalized farmers who charge high rate of interest.
The PUNJAB Experience - FISHY !!! In PB 1 crore acres of cultivated land and the short-term credit required per season at the recommended rate of Rs. 22,000 per acre . On this base, it is estimated that Rs. 22,000 crore is needed, whereas the crop loans outstanding of all banks were around 63,000 crore While there are around 20 lakh farmers in the state, all banks together have issued 40 lakh Kisan Credit Cards. Farmers would need money for other purposes like education of children etc, but that doesn't justify disproportionate agricultural loans
Big Question 1. Can loan waiver be a solution for agricultural stress? a) Long run this definitely bad. b) But as Keynes said "In long run we are all dead" c) The idea is to provide immediate relief you need these. d) Democratic process ensures this. 2. TAXING AGRICULTURAL INCOME? Discuss please !!
Agricultural Credit Enable farmer to purchase inputs , help improve productivity -Local and money lender-25% of money Credit penetration low in North East and Eastern India . Issues of Collaterals Examples from MadhyaPradesh - Mamaji!
Recommendation from MSS . Expand the outreach of the formal credit system to reach the really poor and needy. . Moratorium on debt recovery, including loans from non-institutional sources, and waiver of . Establish an Agriculture Risk Fund to provide relief to farmers in the aftermath of successive Reduce rate of interest for crop loans to 4 per cent simple, with government support. interest on loans in distress hotspots and during calamities, till capability is restored. natural calamities. .Issue Kisan Credit Cards to women farmers, with joint pattas as collateral .Develop an integrated credit-cum-crop-livestock-human health insurance package. .Expand crop insurance cover to cover the entire country and all crops, with reduced premiums and create a Rural Insurance Development Fund to tak up development work for spreading rural insurance . Promote sustainable livelihoods for the poor by improving (i) Finan ial services (ii) Infrastructure ii) Investments in human developmenf, agriculture and business developmenf services including.productivity enhancement, loc l value addition, and alternate market linkages) and iv) Institufional devel pment services (forming and strengthening producers' organisations such as'self-help groups and water user associations)
Government Initiatives Setting up a series of Banks -RRB, NABARD, SMALL FINANCE BANKS, PAYMENT BANKS, MicroFinance banks, SHGs -RBI mandated that 25% of Banks to be in Unbanked rural areas .Kisan Credit Card, JAN DHAN YOJANA Financial inclusion Interest subvention scheme for crop loans upto Rs 3Lakhs with .nterest @7% and 3% subvention for regular payment. . PSL @ 10 % for small (1-2Ht), and 8% for marginal (Upto 1 Ht) Agriculture incomes expemted from income tax.
Pradhan Mantri Fasal Bima Yojana Comprehensive converage insurance against crop loss. . Compulsory for people opting for crop loans for notified crops in notified area and voluntary for non loanee. No upper limit on government subsidy. Losses covered include Non preventables like natural fire, storm, hailstorms, cyclones. Cluster approach of group of districts to accertain the risk profile. . Use of Remote sensing, Smart Phone, Drone for quick estimation. . Premium rate Rabi (1.5%), Kharif (2%) and Horticulture (5%)
Evaluation of PMFBY -Target to get 50% of gross cropped area under this, but currently it is 30%, some states like UP it is just 20% . Kharif 2016 :- Premium Paid :- 14,400 Cr, Claims : - 9797 Crores, Payouts :-9306 Cr. Which means 95% met -Rabi 201 6-17-59% claim payouts . Kharif 2017-5% UTTER Failure !!! . REASONS:- States not contributing their parts.