Only 50% of 3.7 cr Farmers Benefitted From Loan Waiver Since 2014: Study

A State Bank of India (SBI) study has revealed that only 50% of the intended beneficiaries of farm loan waiver schemes announced by nine states since 2014 benefitted as of March due to rejection of their claims, limited or little fiscal space to meet the promises and change in governments in subsequent years.

“Since 2014, out of approximately 3.7 crore eligible farmers, only around 50% of the farmers received the amount of loan waiver till March 2022,” the SBI study states, The Hindu reported.

Pointing out how “despite much hype and political patronage”, the schemes “failed” and were a “self-goal” inflicted by the states on the farmers, the report states: “Farm loan waivers by states have failed to bring respite to intended subjects, sabotaging credit discipline in select geographies and making banks and financial institutions wary of further lending. Essentially, [it is] a ‘self-goal’ inflicted by the State on its subjects!” the report said.

Based on outcomes of 10 farm loan write-off schemes worth about Rs 2.53 lakh crore announced by the states, the study found that 92% of Andhra Pradesh’s 42 lakh farmers benefited while only 5% received the benefits in Telangana.

Telangana, followed by Madhya Pradesh at 12%, Jharkhand at 13%, Punjab at 24%, Karnataka at 38% and Uttar Pradesh at 52%, topped the list of states in the poorest implementation of the schemes in terms of the proportion of the eligible farmers who benefitted.

Contrastingly, Chhattisgarh in 2018, followed by Maharashtra in 2020, topped the list of the maximum number of beneficiaries at 100% and 91%, respectively.

The study also flags concerns regarding the schemes actually helping the farmers in distress. “Of the total accounts eligible for farm loan waiver, most of the accounts (more than 80% in some States) were in standard category, begging a question whose interest rampant waivers actually serve,” it states.

The study also mentions that loan waivers “destroy” the credit culture, which may “harm” the interests of farmers in the medium and long term and also “squeeze the fiscal space of governments” to increase productive investment in agriculture infrastructure.

Regarding the non-performing assets (NPAs) of women-led self-help groups, which are more than 800,000, the study says it is more than 10% across the country with some states like Uttar Pradesh, Haryana and Punjab having NPA ratios of more than 25% while others such as Andhra Pradesh lowest ratio of 0.8%.

Calling for state intervention to provide tenancy certificates to tenant farmers to bring them into the formal credit system, the study estimated that there are 20-30 million landless or tenant farmers based on its analysis of PM-KISAN and KCC beneficiaries, Business Standard reported.

“There is a gap between 117.8 million PM KISAN beneficiaries and 74 million farmers having KCCl.” Of the remaining 40-odd million farmers, at least, 20-30 million could be tenants/lessees/landless farmers, the study said.