Wednesday, March 12, 2008

Andhra Pradesh’s Share in the Unpaid Farm Loans of India Amounts to 13%

by Phillip Horton

The historic loan waiver announced by the finance minister of India for farmers in the budget this year has triggered a debate in the country as to how the farm loan waivers will impact the banks of the India. The historic loan waiver to debt ridden farmers of India will give them a second chance to come out of their debts and start afresh. According to the finance minister P.Chidambaram, as many as four crore farmers of India will benefit from the 60,000 crore rupees farm loan waiver and there will be three crore marginal and small farmers as well as one crore other farmers will benefit from the never before farm loan waiver announced in the recent budget.

The UPA government has waived the existing loans of the farmers which will give the indebted farmers another opportunity to continue their farming activities and the waiving of the loans means that the debt ridden farmers will once again qualify for new farm loans. However, the loan waiver will no doubt help the farmers, but the government must think about other means so that farmers do not get into the debt trap otherwise it will have to come with similar schemes to help the farmers even in the future.

The fact is that the indebtedness of farmers is in no way directly connected to either economic or agriculture growth. The case of Punjab which is India’s highly agriculturally developed state and yet production in its agriculture sector has grown quickly and many industries, the rate of indebtedness in the households that survive on their agriculture produce has in fact grown quickly.

The direct agricultural accounts in the state of Punjab have grown by 5.7% annual compound rate from the years 2000-2001 to 2005-2006 and the same rate for the nation had stood at 4.9%. The unpaid agri-loans in the state have also increased by 21.2% annual compound rate. Another way of looking at the problem is looking at the number of unpaid farm loans in the different states of the country. Bihar, the poor state does not have incidences of farm indebtedness, nor is it found in the Rajasthan that has to face drought every now and then.

Agriculture in Madhya Pradesh is also poor and indebtedness is found in this state as well. However, the state of Andhra Pradesh has the biggest number of farmers that are indebted with agriculture loans and AP is India’s 5th largest food grain producer. As per the data of RBI Andhra Pradesh’s scheduled commercial banks have 19% direct agriculture loan accounts and this too only in the year 2005-2006.

The total unpaid loans in the direct agriculture loans accounts of AP has grown by 28.2% annual compound rate and the same percentage of the nation stood at 27%. This has led to AP’s share of unpaid loans against the nation’s total from 12.3% during 2000-2001 to 12.9% during 2005-2006. The other Indian states have a different story to tell about their outstanding farm loans amount and the reasons for it are far too different.

 

 

 

Stories related to: Andhra Pradesh’s Share in the Unpaid Farm Loans of India Amounts to 13%

 

 

Visited 1092 times, 1 so far today