The government on Thursday decided to extend additional refinance support of Rs 30,000 crore to the National Bank for Agriculture and Rural Development (Nabard). This will be used to push liquidity through regional rural banks (RRBs) and co-operative institutions, and expand the ongoing drive to enlist 25 million new farmers for concessional credit as part of its Covid-19 relief package.
These measures, say critics, do nothing to address the fundamental problem of low prices and falling demand. The step to enlist 25 million new farmers into the existing concessional loan scheme does not have a time period, while in the case of additional finance to Nabard, critics asked how banks — which lend at 4.8 per cent interest — would recover from farmers when their agri operations have run into losses?
The refinance for Nabard, according to Finance Minister Nirmala Sitharaman, will be over and above the existing Rs 90,000-crore refinance facility that Nabard was to extend this year to RRBs and co-operative institutions for crop loan requirement of farmers.
“To me a better and more viable way would have been to waive existing interest on short-term crop loans and term loans for agriculture, along with giving states more funding for central schemes, as they are starving for funds, while at the same time ensuring minimum 10 days work under Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) per month for the rural poor,” Ajay Vir Jakhar, chairman, Bharat Krishak Samaj, told Business Standard.
The enrolment of 25 million farmers under the Kisan Credit Card (KCC) scheme is part of the ongoing drive the Centre has undertaken to bring more farmers under institutional credit, so that they can avail of concessional loan of Rs 2 trillion.
Under the scheme, it has sanctioned 2.5 million new kisan credit cards during the lockdown period and sanctioned loans amounting to Rs 25,000 crore.
The concessional loan programme — under which interest subvention is given on timely repayment of crop loan — has been extended till May 31 for calculation of timely repayment tenure.
“Thursday’s announcement shattered the hopes of financial assistance to small and marginal farmers. Extending the two-month moratorium on crop loans is an immediate benefit. The other announcement on increased credit flow and KCC numbers may be of future advantage, if any,” said Sudhir Panwar, former member, Uttar Pradesh Planning Commission.
In case of MGNREGA, which is providing succour to millions of migrant labourers returning home, the government claimed that so far, 146.2 million persondays of work has been provided under the scheme. This is 40-50 per cent more than the same period last year, but experts said in reality the work generated in April was more than 40 per cent less than last year, while in May (till May 13), it is almost 10 per cent less, compared to the same period last year.