Farm loans

tivation on a per hectare basis.

This trend of taking out larger loans against gold could be particularly true of Tamil Nadu, Andhra Pradesh, Kerala and Karnataka, the study said.

The government subsidises short-term crop loans to make farming cheaper. Moreover, banks must necessarily lend to farmers because agriculture is a “priority lending sector”. For instance, all scheduled commercial banks must direct 40% of their adjusted net bank credit towards priority sector lending.

Farmers get crop loans at a cheaper 7% as compared to consumer loans, which range from anything between 12% and 14%. For those making timely repayments, the effective rate of interest is even lower at 4%.

Banks tend to lend more easily to farmers who additionally pawn their gold as “these are secured loans”, the RBI study said. “This ultimately leads to diversion of funds and consequently, high incidence of indebtedness among the farmers,” it added.

The study called on banks to “flag agricultural loans sanctioned against gold as collateral”.

According to a 2018 National Bank for Agriculture and Rural Development survey, “more than one in two agricultural households surveyed in 2018” were indebted. The size of debt owed by them was nearly equal to their annual incomes.

For deeper insights, RBI calculated the ratio of crop loans vis-à-vis the value of farm output as well as cultivation costs. It found 11 states had higher loanoutput ratio than the national average. This shows a “huge disparity” in access to credit, according to the study.

Kerala had the highest loanoutput ratio of 0.90, while West Bengal (0.09) the lowest. Though Rajasthan, Uttar Pradesh and Bihar had values of loan-output ratio above the all-india average (0.32), farmers in these states did not have “adequate credit” to meet their requirements, pointing to a lack of clear picture, the RBI study said.

To be sure, farmers rely on a variety of sources, especially private lenders, to meet their costs. Nearly 30% of agricultural households take loans from high-interest private lenders, according to Nabard’s 2018 “allindia financial inclusion survey”. The RBI study said this too was a “cause of concern”. The RBI study assumes significance because unproductive loans that don’t go into generating more farm income end up creating debt traps.

Poor returns from farming could be just one of the reasons why farmers may be using cheaper crop loans to “smoothen” consumption needs, such as at the time of a wedding in the family, said economist Abhijit Sen. “Farmers could be taking out farm loans for capital investments too,” he said.

Capital investment refers to any spending on farm assets, such as a tractor, for which farmers need to pay higher interests. “The problem is also that banks have had to meet farmers’ need for long-term credit requirements which should have been met by cooperative banks,” Sen said.

The inability to repay debts has prompted an “unprecedented increase”in farm loan waivers since 2014-15, amounting to ₹2.4 lakh crore or 1.4% of the country’s 2016-17 GDP (at current prices, or prices not adjusted for inflation), the RBI study noted.

The government’s Volume 2 of “Report of the Committee on Doubling Farmers’ Income” states that the “average monthly consumption expenditure of a farm household” was ₹6,223 and farming costs have risen by over a third in the last five years. rienced administrator from Karnataka Brijesh Patel was initially seen as the frontrunner for the job. He will also be under pressure from within to visibly restore BCCI’S influence in the International Cricket Council that many cricket officials felt was ceded under COA.

Ganguly has vowed to take steps for the welfare of first-class cricketers, a group that has expanded after the board accorded recognition to many new states. The trickiest issue could still be the strict “conflict of interest” clause, which he criticised after falling foul of it as he held mentorship (since given up) of an IPL team and had taken up a role as a media commentator on the game.

As skipper, Ganguly took criticism of poor form as well as actions on his chin, never losing the smile. But he was no sitting duck by any means. In 2016, as the leading light in the Cricket Advisory Committee that picked the India coach, he pushed for former team mate Anil Kumble over incumbent Ravi Shastri. The subsequent public exchange of criticism between Shastri and Ganguly — even though Sachin Tendulkar and VVS Laxman formed the rest of the panel — proved that.

It suggests Ganguly, mentored by the late cricket administrator Jagmohan Dalmiya, would be his own man as BCCI president, but one who is armed with the canny knack of showing the diplomacy required to help restore the credibility of the Indian cricket administration.

Former India skipper Dilip Vengsarkar endorsed Ganguly’s choice. “He was an excellent player, very stylish. He got runs everywhere. He was an outstanding captain. I am very happy he will become BCCI president. Indian cricket is in good hands. He is a capable administrator which he has proved at CAB,” he said.