The Finance Minister has announced a number of facilities for the farm sector. But as per past experience, farmers do not realise what is ensured in the Budget. This is because the system is not well guided both in clarity and specific commitment which is much needed in the context of the prevailing prohibitive factors.
While the new private banks are expected to open branches in rural areas, they are now given facilities which are provided to the nationalised banks. But the introduction of facilities announced in the Budget should be carried out retrospectively as the neglected private and co-operative banks have already financed farm loans without the expected facilities. As a large number farmer consumers are being served by private banks they should get the facility of interest concession schemes retrospectively. For instance, the interest subvention scheme, which is introduced for farmers getting loans from nationalised banks, was not made applicable to private banks.
The original policy of both the government and RBI to ask banks to open their branches in rural areas with population of 2000 was not responded to by the nationalised banks. Both the regulatory authority and government have failed to enforce the policy even though nationalised banks are directly under their control. Instead, the scheme of banking correspondents was pushed through without visualising the impact and efficacy of the scheme and it has been approved in the new Budget as the banking correspondents are being sought to be encou-raged for providing financial services in the rural areas.
The experience of banking correspondents so far is not encouraging or beneficial to farmers. Most of the banking correspondents interviewed by this writer have pointed out that they are appointed on contract basis without any other facilities which other members of the banking staff are getting and the monthly remuneration is not more than Rs 3500. Farm sector consumers are expecting loan facilities in various forms which other consumers are getting. Besides, they should not be under the same NPA concept which is convenient to regular income groups like the salaried classes in both the government and private industrial enterprises.
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THE farm sector needs special products which expectation has not so far been considered by any bank even though most banks are propagating that they are financing the farm sector. Again the banking correspondents are asked to collect deposits from rural areas which are more in need of loan facilities rather than deposit schemes as they are not fortunate enough to have surplus funds. If the banking correspondents have no authority to sanction the loan proposals which are expected to be forwarded to the city-centric bank officials, what is the use of the scheme which ultimately amounts to centralisation in urban areas rather than decentralisation in the interest of rural areas?
As the CAG has pointed out, most of the beneficiaries of the loan waiver scheme are kept out of it because of misinterpretation of the criteria laid down by the RBI. For instance, the criterion was based on land under cultivation as it was the economic criteria. But land without any cultivation or fallow was clubbed and such farmers were kept out of the loan waiver scheme. There are other instances of deficiencies in the implementation. Hence, as the new Budget has not provided any relief to debt-ridden farmers, the previous loan waiver scheme should be thoroughly examined or reassessed so that the real beneficiaries who are neglected would get the relief.
The new Budget has made a provision of relief of four per cent interest concession on crop loans. But the condition is that the repayment should be regular. In fact relief should be without any condition if it is real relief. In the case of the farm sector there is no guarantee of fixed and regular income and hence the condition of regular repayment should not be imposed on farmers. If relief is to be given, let it be straight relief without any condition. In other sectors while granting concessions no such condition is laid down. Even the higher loan amount when it crosses the NPA border is considered for restructuring and eligible for concessions. Why should the same relief criteria not be made applicable to the farm sector?
The farm sector has the most important national responsibility of producing food and other crops of essential commodities and now it is more so because of the proposed Food Security Act. If this sector is expected to carry out the responsiblity, it should be adequately subsidised and protected by special schemes and financial products so that farmers would feel safe in involving themselves in agriculture instead of leaving the farms for better earning opportunities in the urban areas.