Although the agricultural credit outflow has been rising steadily in the last few years, gross regional imbalances have persisted with eastern, central and north-eastern regions of the country staying laggards, an assessment by the National Bank for Agriculture and Rural Development (NABARD) has noted.
Out of the total agricultural credit outflow of Rs 8 lakh crore to the farmers by banks in the last fiscal, more than 61% went to farmers in the southern and northern regions while the share of western (12.66%) and eastern (9.47%) regions has been rather small. Credit disbursement to farmers in north-eastern states has been virtually negligible.
“There has been impressive growth in volumes of agricultural credit disbursed while the physical outreach is a concern,” NABARD has stated in an assessment titled ‘Enhancing institutional credit flow to farm sector’.
Finance minister Arun Jaitley in the budget for 2015–16 had set a target of Rs 8.5 lakh crore of credit flow for the banks, an increase of Rs 50,000 crore from the previous fiscal. s R7 lakh crore worth of agricultural credit was disbursed by banks in 2013–14. Agriculture credit is provided at a concessional rate of 7% with an interest subvention of 3% for timely repayment.
There are also wide variations in the average per-capita loan amount. While an average outstanding loan for a farmer in Kerala is R2.1 lakh, at the same time the lowest quantum of loan is the lowest in Assam at Rs 3,400, it noted.
“Disparities in cropping pattern, cost of cultivation, connectivity etc. have been identified as major reasons for regional imbalance in credit outflow”, NABARD has noted. Nabard has also stated that out of the total land holdings of 13.8 crore farmers in the country, out of which more than 85% belong to the small and marginal farmers, more than 52% do not have access to bank accounts. “Most of the farmers who do not have bank accounts are concentrated in eastern, central and north-eastern states,” Nabard report has stated.
The report says that banks prefer credit intensification per account over the adding new accounts for the farmers.
“The agricultural credit intensity is increasing rapidly but the production response is not commensurating,” it noted.
For increasing agricultural credit outflow in the eastern, western and north-eastern regions, NABARD has suggested that the finance ministry must ask banks to add at least 1 crore bank accounts of the farmers annually for the next couple of years, so that a large number of small and marginal farmers have access to formal a banking system.
A task force headed by then Nabard chairman U C Sarangi, for studying agricultural indebtedness in 2010, had stated that just one in every seven marginal farmers has access to institutional credit.