Harvest loan exemption highlights skewed distribution of benefits
The Government of Tamil Nadu’s agricultural loan exemption program has once again highlighted how skewed the distribution of benefits is.
The farmers of Salem, Tiruchi and Erode constitute a substantial part of the beneficiaries. About 31% of the total amount of the outstanding loan canceled – 3,727.72 crore out of 12,110.75 crore – comes from these regions. Once again, in terms of beneficiaries, those from these regions – 4 28 138 – represent 26% of the total of 16 43 347 farmers.
This elicited a strong reaction from some farmers. PR Pandian, a leading farmer based in Mannargudi, claimed that despite the preeminent position in agriculture, the districts of the Cauvery Delta had received a “rough deal.” The total amount of canceled loans in the tax districts of Thanjavur, Thiruvarur, Nagapattinam and Mayiladuthurai is approximately 1,133 crore. KN Nehru, a senior DMK official from Tiruchi, suspected that even when the loan was disbursed this year, sections of the beneficiaries in the regions had anticipated the formulation of such a program.
However, senior officials rejected these claims. As for the three regions taking a substantial share of the canceled loan amount, they said that even under the 2006 and 2016 loan waiver programs, the share of these regions was similar to the present one. Explaining the organizational structure of cooperative institutions, they said that central cooperative banks (BCCs), whose functional jurisdiction includes primary agricultural cooperative credit societies (PACCS), cover more than one district. For example, the Salem CCB also takes care of part of Namakkal. Likewise, Erode covers Tiruppur and another part of Namakkal. It is not correct to assume that one district has more than others, based on CCB figures.
Another factor is the area of operation managed by the CCBs. Third, the economic strength of PACCS is also important. If some companies are profitable, they will have more resources than others and lend more money than sick companies. This, in turn, is governed by the repayment capacity of the lenders.
Farmers in the western belt are generally known to pay off quickly, officials said.
This time, the crop loans were granted through Kisan credit cards, requiring the production of all essential land documents. About 1.38 lakh more farmers were covered in January of this year than the number of farmers covered in the same month last year.
Although part of the total canceled loans relate to “agricultural jewelry loans”, this was done with regard to first-time borrowers. As a precaution, the jewels were considered as collateral guarantees, apart from the land documents. Of the total amount, about 9,700 crore was disbursed this fiscal year, officials said.