Access To Credits by Marginal Farmers

India has from the very beginning been a country where 70% of the population still lives in villages. Almost two-thirds of workers in villages are farmers and of these, an overwhelmingly large percentage is small and marginal farmers. By marginal farmers, I mean farmers who have land possession of not more than four hectares. These farmers play a significant role in the agrarian economy of the country, yet they remain disadvantaged, in terms of accessing technology, inputs, and above all, credits and subsidies from the government. The Government has down measures to help farmers with credit through provisions like loans, but the accessibility of these facilities includes a lot of legal knowledge, something the illiterate marginal farmers are not very accustomed to. They are less privileged than the medium and large farmers in terms of assets available to offer as collaterals for their loans. As a result, private money lenders remain their primary and most important source of credit. Often, a low yield in the harvest leaves the farmers in a position where they are unable to repay their debt. These farmers have small asset base, and they need credits to meet both consumption needs as well as cultivation costs. Most importantly, farmers do not have provisions of debt relief under any law.
The states of Punjab, Andhra Pradesh, Karnataka, Maharashtra and Kerala have time and again recorded a spurt in distress driven suicides among farmers. A series of such suicides took place in the year 2009, in the villages of Andhra where the area was stricken by draught and farmers had a tough time dealing with the natural calamity.
The NCEUS (National Commission for Enterprises in the Unorganized Sector) has tried to analyze issues confronted by farmers in India and through meetings, discussions based on surveys, tried to get to the roots of problems faced by the farmers. Areas of high agrarian distress were surveyed and the NCEUS examined the credit and debt situations with special reference to the small and marginal farmers.
Agriculture is very much like the share market. When a farmer invests in seeds, depending on the yield from the harvest, the return may go up high or end up in a loss. Profit remains only a matter of chance and co-incidence.
Agricultural loans and credits should follow a different set of rules altogether. The interest on the credit loaned for agricultural purpose should not be definite, but should depend on the annual yield on the harvest. There should also be provisions made for insurance and security on cultivation, since agriculture is essentially a natural phenomenon, and no matter how advanced a technology is used, a lot depends on the rain and the sun.
Apart from agriculture, farmers should be encouraged to associate themselves with animal husbandry, fisheries, milk societies, horticulture, and small scale cottage industries such as weaving and other sorts of handloom. The profit from these parallel sources should be able to keep them going even when there is a bad crop year; also these could act as parallel sources of capital so that they do not always have to depend on loans.

Debashree Nag

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