In what could be an indication of growing farm distress in Gujarat, farmers in the state are unable to repay short duration, low interest loans, reveals a latest report of State Level Bankers Committee (SLBC). Accordingly, the Non Performing Assets (NPA) for crop loan for the July-September quarter for the fiscal 2018-19 stood at Rs 2,158 crore, which is 46 per cent higher than Rs 1,478 crore in the previous quarter. Overall NPA in the second quarter of the fiscal stood at Rs 5,419 crore, or 26 per cent higher than first quarter of the fiscal. Bankers and representatives of farmers agree that lack of remunerative prices for crops is depleting farmers abilities to repay both, short term and long term, loans.
Crop loans are used to buy daily necessities for farming, like seeds, fertilizers and pesticides. Banks charge seven per cent interest over it. Normally, it is repaid in the same cropping year. In this case, farmers get a subsidy of thee percentage points, so the actual interest pay out is only four per cent. However, the latest SLBC report reveal that farmers in the state are finding difficult to repay these loans.
Sagar Rabari, founder president of Gujarat Khedut Ekta Manch said that the figures reveal a sorry state of farm distress in the state. "This indicates that farmers' dependence on loans for day to day farming activity is rising. Since they are not getting remunerative prices, they are not able to repay loans. Even as the government claims to buying crops at Minimum Support Prices (MSP), only 10-15 per cent farmers are covered and 85-90 per cent farmers are deprived of remunerative prices," said Rabari. According to Rohit Patel, convenor of SLBC in Gujarat, farmers are unable to repay loans because of a multitude of factors. "Even if there is delay of one day in repayment of loans, the account is classified as NPA. Also farmers may not be getting returns sufficient to enable them repay loans. With election year approaching, farmers may be anticipating a waiver of loans and so not repaying," said Patel.
Moreover term loans, used generally for buying tractors or creating agriculture infrastructure like cold storages, stood at Rs 3,261 crore in second quarter of the fiscal, a rise of 16.8 per cent compared to Rs 2,792 crore in the first quarter. Patel said the non-repayment of term loans and crop loans are interlinked resulting in a rise in overall agriculture loans.
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