20 July 2017-Current Affairs

In News

  1. Farmer distress

  1. Farmer distress
  • Issues
    • Indian agriculture is characterised by low scale and low productivity.
    • About 85% of the operational landholdings in the country are below 5 acres
    • 67% farm households survive on an average landholding of one acre.
    • More than half of the area under cultivation does not have access to irrigation.
    • Agriculture income generated at average size of landholding is not adequate to meet farmers’ needs.
    • access to non-farm sources of income is highly skewed
    • Savings generated from unremunerative crop enterprise are inadequate for farming investments.
    • Rising expenses on health, education, social ceremonies and non-food items put additional financial demand on farm families.
  • Loans
    • The share of institutional loans disbursed during a year to agriculture and allied sectors has risen from 8.9% of the value of output in 2000-01 to 31.4% in 2015-16.
    • The amount of short-term institutional loans for agriculture exceeds the total cost of inputs at national level , indicating crop loans likely being spent on non-agricultural purposes.
  • Drawbacks of Loan Waivers
    • It covers only a tiny fraction of farmers.
    • The farmers investing from their own savings and those borrowing from non-institutional sources are equally vulnerable to weather and market risks
    • it provides only a partial relief to the indebted farmers as about half of the institutional borrowing of a cultivator is for non-farm purposes.
    • one household can have multiple loans either from different sources or in the name of different family members, which entitles it to multiple loan waiving.
    • Loan waiving excludes agricultural labourers who are even weaker than cultivators in bearing the consequences of economic distress.
    • It severely erodes the credit culture, with dire long-run consequences to the banking business
    • The scheme is prone to serious exclusion and inclusion errors, as evidenced by the Comptroller and Auditor General’s (CAG) findings
    • Such schemes have serious implications for other developmental expenditure, having a much larger multiplier effect on the economy. A similar amount spent on improvement of agriculture infrastructure and other developmental activities would create a base for future growth and development of the sector.
  • Sustainable solutions
    • Identify the vulnerable farmers based on certain criteria and give an equal amount as financial relief to the vulnerable and distressed families.
    • Raise income from agricultural activities and enhance access to non-farm sources of income.
    • The low scale of farms necessitates that some cultivators move from agriculture to non-farm jobs.
    • Improved technology, expansion of irrigation coverage, and crop diversification towards high-value crops are appropriate measures for raising productivity and farmers’ income.
    • Remunerative prices for farm produce
    • States undertake and sincerely implement long-pending reforms in the agriculture sector with urgency.

Reference

  1. http://www.thehindu.com/todays-paper/tp-opinion/think-beyond-loan-waivers/article19311079.ece