Only 50% farmers benefited from farm loan waivers-SBI study

As per a study by State Bank of India’s researchers, only about 50% of the intended beneficiaries of farm loan waivers announced by 9 States since 2014, have actually received debt write-offs.

• Since 2014, out of approximately 3.7 crore eligible farmers, only around 50% of the farmers received the amount of loan waiver till March 2022.

Key Highlights

• Worst performers: As of March 2022, the poorest implementation of farm loan waiver schemes in terms of proportion of eligible farmers who had received the announced benefits, were in Telangana (5%), Madhya Pradesh (12%), Jharkhand (13%), Punjab (24%), Karnataka (38%) and Uttar Pradesh (52%).

• Best performers: Farm loan waivers implemented by Chhattisgarh in 2018 and Maharashtra in 2020, were received by 100% and 91% of the eligible farmers, respectively. A similar waiver announced by Maharashtra in 2017 worth ₹34,000 crore for 67 lakh farmers, has been implemented for 68% of beneficiaries, SBI researchers reckoned.

• The SBI study was based on outcomes of 10 farm loan write-offs worth about Rs. 2.53 lakh crore announced by nine States, starting with Andhra Pradesh and Telangana in 2014.

• As many as 92 per cent of Andhra Pradesh’s 42 lakh farmers eligible for loan waivers had benefited, while the number was a mere 5% for Telangana.

Reasons

The report identified following reasons for low beneficiaries:

• Rejection of farmers’ claims by State Governments,

• Limited or low fiscal space to meet promises, and

• Change in Governments in subsequent years.

Farmer’s income increased

• Between financial year 2017-18 and 2021-22, the average income of farmers rose by 1.3 -1.7 times across India, while in some crops like soybean in Maharashtra and cotton in Karnataka, incomes have in fact doubled during the same time.

• The SBI report added that income from allied and non-farm activities grew by a significant 1.4-1.8 times in line with the increase in farmers’ income during the same period.

• The report also said that Minimum Support Price (MSP), increasingly aligned with market-linked pricing, has been pivotal in ensuring better prices to farmers.

• It said the KCC scheme, continuously improved and revamped by the government, has been instrumental in bringing a large number of farmers (currently about 73.7 million active KCCs) under the ambit of a formal credit mechanism at subsidised rate of interest from institutional players.

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