Govt may exceed Rs 10 lakh cr farm credit target once again

A 2014 study says that share of loans smaller than Rs 200,000 has fallen sharply over the years

The Centre could exceed the farm credit target of Rs 10 lakh crore budgeted for 2017-18 financial as around Rs 6 lakh crore has already been disbursed in the first six months.

This also indicates that in 2018-19 Budget, the government might fix a higher target of farm credit disbursal a trend which has been followed since the last several years.

"We have targeted to distribute a farm credit of around Rs 10 lakh crore in FY 18 of which almost 60 per cent has been met, the target might by moved up in 2018-19 budget," a senior official remarked.

In 2016-17, the government had targeted to distribute Rs 9 lakh crore as farm credit while the actual disbursal was almost 118.42 per cent more at RS 10.65 lakh crore, similarly in 2015-16, the government had targeted to distributed around Rs 8.50 lakh crore as farm credit while the actual distribution was almost 108 per cent more.

Though, the actual disbursal of farm credit has been exceeding the targeted limits since the last few years, but how much of this actually goes for the benefit of small and marginal farmers remains to be seen.

According to a 2014 study by titled Bank Credit to Agriculture in India in the 2000s: Dissecting the Revival, by R Ramakumar and Pallavi Chavan from the Tata Institute of Social Sciences between 2000 to 2011 the share in total direct credit of loans less than Rs 200,000 each fell from 92.2 per cent in 1990 to 78.5 per cent in 2000 and 48 per cent in 2011. The paper studied the exponential growth in credit from 2000 to 2011.

In other words, the bulk of loans advanced for agriculture moved away from small, marginal, or medium farmers, and towards large business interests.

That apart, the month-wise disbursal data also showed that almost 46 per cent of farm credit was availed between January to March every year, a period when there is minimal farming activity across the country. A common inference from this is credit could be that credit is mostly being availed by big agriculture firms.

Meanwhile, the 2017-18 provisional data also showed that states like Rajasthan, Madhya Pradesh and Maharashtra have availed sizeable chunk of farm credit in the first six months, challenging the traditional leaders of Punjab, Tamil Nadu, West Bengal, Uttar Pradesh etc.