Question mark over farmers’ condition!

Considering the uncertainty endemic to agriculture, any significant increase in the present lending rates by banks for crop loans or any reduction in the concessionality of farm loans will be a retrograde measure.
The Centre was contemplating two major changes in the interest subvention scheme for crop loans. First, to allow banks to lend at their normal priority sector lending rates which are linked to the base rates. Second, to switch over to disbursing interest subvention on a Direct Benefit Transfer-based reimbursement after the farmer has settled his liabilities to the lending institutions.
Further, the change in procedure, which expects the farmer to pay higher interest rates and then receive reimbursement of the interest subvention component through DBT would needlessly add to the complexity of the scheme and compound the misery of the farmers. In the earlier system, when the bank loans were disbursed through the farmers’ accounts, the farmers enjoyed concessional credit even at the initial stage when drawing the loans. Under these circumstances, switching over to the new model will not bring any significant benefit in terms of greater accuracy of targeting, accountability or timely availability of credit to the farmers.
Moreover, with the power for fixing prices for fertilizers vested with the fertilizer manufacturing companies, by shying away from its responsibility of giving direct subsidy on fertilizers, the Centre works corporate-friendly, feel farmers.
At this juncture, Tamil Nadu Chief Minister Jayalalitha has written a letter to the Centre insisting for the continuation of the present position in the above two schemes. Although it is welcome, the handling of farmers by the ADMK government caused worry. The interest rate for farm loan fixed by primary agricultural cooperative banks, under the control of the State government, is 13 percent and for gold loans 17.75 percent. The banks have threatened to auction jewels mortgaged by farmers. But Jayalalitha keeps mum over this.
So also, the drought relief of Rs.15,000 per acre announced by the State government in 2012-13 when all districts except Chennai were declared drought affected, has not been distributed to any farmer so far. Similarly the interest free distributed by cooperative banks that year were not written off and converted into medium term loans, for which 13 percent interest and penalty interest were levied from the date of availing of loans to be repaid in three instalments, and fresh loans were given to only those who remitted first instalment. Others were disqualified to get cooperative loans. Hence many farmers had to borrow from usurers and undergo sufferings.  
As far as the Center is concerned, a considered view needs to be taken only after examining the pros and cons of the proposed change in order to achieve the end objective of effective and foolproof delivery and ultimately farmers’ welfare. Will the ADMK regime redeem them form this misery?
Whether the Centre will ensure continuance of the interest subvention scheme in the present form while initiating the process of deliberating on the contemplated changes with the stakeholders to arrive at a more effective and supportive farm credit scheme and the ADMK regime come to their rescue is to be seen. Meanwhile, the condition of farmers remains a big question. (28 June 2015)