Microfinance Reports

Report of the Task force on credit related issues faced by Farmers in India

In 2009 , the Government of India constituted ” The Task force on Credit-Related issues of Farmers “. The committee was constituted to investigate credit related issues faced by farmers in India.

Even though credit disbursed for the Agriculture sector has doubled over the past few years, numerous small and marginal farmers, especially tenant farmers, oral lessees, and sharecroppers, continue to have difficulty in accessing credit from formal sources. The dependence of these small farmers on moneylenders for loans has disturbingly been on the rise over the past few years. The committee was specifically constituted to investigate these burning issues.

The committee was headed by Mr U.C. Sarangi, Chairman of the National Bank for Agriculture and Rural Development and it submitted it’s report in June 2010 to the Ministry of Agriculture.

Some of the suggestions given by the Committee include :

  • Widening of the definition of ‘moneylender’ to include all forms of for-profit, closely-held financial organisations such as non-banking finance companies,
  • The creation of a quasi-judicial authority for redressing grievances of farmers at either the district or appropriate lower level,
  • Pegging the lending rate to the prevailing bank rates.

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Report of Task Force on Credit Related Issues of Farmers in India-pdf-106pages-1.5MB

Related  News

Farm credit surges, so does moneylenders’ hegemony – September 2010

States may wield the stick on moneylenders – October 2010

Summary of Observations and Recommendations

1.The  farmer  is  a  risk-taking entrepreneur who faces  uncertainties from weather,  spurious inputs, pests and diseases, and market shocks among other risks. Inadequate and untimely credit along with procedural hassles from formal institutions add to his/her burden. In recent years, policy interventions have led to doubling  of  agricultural  credit,  but  the  limited  access  of  small  and  marginal farmers  to  institutional  credit  continues  to  be  a  matter  of  concern.  What  is worrying is that the proportion of such farmers is increasing and they form more than four-fifths of the operational holdings.

2.With spiralling costs of input-intensive cultivation there is an increasing need for  credit,  but in the absence of adequate and appropriate cover against various uncertainties,  and  commensurate rise in returns, the farmer’s risk gets further  accentuated.  This  calls  for  risk  mitigation  mechanisms  including  the promotion of alternate agricultural practices that  reduce costs, insurance policy that compensates income loss, and appropriate prices for agricultural produce. It also calls for aggregation by farmers of their financial and other  inputs, and commodity processing and marketing needs, so that the market can do more justice to their transactions with it.

3.The Task Force had its first meeting on 17 December 2009, and its last meeting on 30 June 2010. Apart from its own deliberations and study, it had the advantage of being  educated by stakeholders from  among women and men farmers, government functionaries, bankers, academicians, legal experts, moneylenders, activists, agricultural scientists, and others. It also engaged in its own desk and field research, learning from various studies, existing policies and legislation, from interactions in the field with small and marginal farmers, tenant farmers, oral lessees, members of self-help groups (SHGs), joint liability groups (JLGs),  farmers’  clubs,  primary  agricultural  credit   societies  (PACS),  thrift cooperatives and seed growers’ cooperatives.

4.The observations and recommendations of the Task Force are laid out in this chapter under the following issues:

a.  farmers who were not covered by the Agricultural Debt Waiver and Debt Relief Scheme, 2008 (ADWDRS);

b.  policy measures for addressing the issues of farmer indebtedness to moneylenders and on measures to provide relief to such farmers;

c.  various measures including the Kisan Credit Card (KCC) scheme to ensure  coverage of small and marginal farmers, tenant farmers, share croppers, and oral lessees by the institutional credit fold, to reduce their dependence on informal sources; and

d.  legislation regulating loans from private moneylenders.

For the rest of the observations and recommendations

Download the Complete Report at the Link Below

Report of Task Force on Credit Related Issues of Farmers in India-pdf-106pages-1.5MB

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