Only 50% farmers benefited from farm loan waivers - SBI

Tags: Economy/Finance

According to a study by the State Bank of India, only half of the intended beneficiaries of farm loan waivers announced by nine states since 2014 have actually received loan waivers.

Important facts

• The worst implementation of farm loan waiver schemes till March 2022 was in Telangana (5%), Madhya Pradesh (12%), Jharkhand (13%), Punjab (24%), Karnataka (38%) and Uttar Pradesh (52%).

• In contrast, farm loan waivers implemented by Chhattisgarh in 2018 and Maharashtra in 2020 were received by 100% and 91% of eligible farmers, respectively.

• Since 2014, out of about 3.7 crore eligible farmers, only about 50% farmers have received the loan waiver amount by March 2022.

Major findings of the study

• The study is based on the primary data of SBI agri-portfolio across states.

• It analyzes the change in the income of farmers in the last five years.

• The study noted that the increase in income of farmers engaged in cash crops has been higher than those growing non-cash crops.

• Along with agricultural income, most states saw a significant increase of 1.4-1.8 times in allied/non-farm income over the same period.

• The average farmer's income grew 1.3 to 1.7 times between FY 2018 and 2022.

• In some crops like soybean in Maharashtra and cotton in Karnataka, farmers' income has doubled during this period.

• The Kisan Credit Card (KCC) scheme should be tweaked to make it a Livelihood Credit Card (LCC).

• Self-Help Groups have around 10 per cent NPA across India.

Reasons for less reach to farm loan waiver

• The following three factors have been identified in the report as possible reasons for the low implementation rate of loan waivers -

1. Rejection of farmers’ claims by State Governments

2. Limited or low fiscal space to meet promises

3. Change in Governments in subsequent years