Haryana Chief Minister, Bhupinder Singh Hooda on Tuesday urged Union Finance Minister, Pranab Mukherjee to increase upper limit of loan under Debt Swap Scheme (DSS). The move aimed to make tenants and sharecroppers eligible for taking agricultural loans, provide interest subvention to the loanees of long term cooperative credit structure and decrease the rate of interest charged by the banks from BPL families in self help groups.
Speaking in the meeting of chief ministers of the north zone states held under the chairmanship of Union Finance Minister, Hooda said that upper limit of loan under DSS should be increased from Rs 50,000 to Rs two lakh, as the maximum amount of loan disbursed under this scheme was quite inadequate to make any significant impact on indebtedness. Only an amount of Rs 50,000 is being given under this scheme which is on the lower side. For a prosperous state like Haryana, farmers had to take a loan of Rs two to three lakh from local non-institutional sources to meet any major farming or non-farming need.
He also urged the Finance Minister to earmark at least three per cent of the target of disbursement of loan for agriculture for extending loan under DSS. Banks in Haryana had disbursed loans of Rs 55.89 crore until December, 2009 against the pro-rata target of disbursement of Rs 424.22 crore. Massive awareness campaign should be conducted in each block so that the farmers get to know about the operations of DSS which can free the farming community from the clutches of money lenders, he added.
Underscoring the need for making tenants and sharecroppers eligible for taking agricultural loans, Hooda said Rural Financial Institutions (RFI) should not concentrate only on large borrowers to bring down the cost. Small borrowers were in fact more important than large borrowers. There was inter-regional difference in the reach of RFIs. Their reach should be in every nook and corner of the state so that people in every area could benefit from credit lending.
He said, “Presently, banks are seeking collateral of agricultural land for securing agricultural loans. But, agricultural land is valued at a very conservative rate. As far as lending by Cooperative Bank is concerned, the floor rates fixed by Government are the minimum value for the purposes of collateral benefit. The same principle should be followed by Commercial Banks”.
He said that Commercial Banks should adopt the same policy for commercial loans as is adopted by them while settling of Non Performing Assets (NPA) in commercial and industrial sector.
Urging the Union Finance Minister to extend the facility of interest subvention to the loanees of Long Term Cooperative Credit Structure on the pattern of short term, the Chief Minister said that the Haryana Government had already been providing interest subvention at the rate of five per cent to the loanees who are regular in paying their current installments of Long Term Cooperative Credit Structure, whereas the Government of India had been providing interest subvention at the rate of two per cent under Short Term Cooperative Credit Structure for crop loan to those loanees who are regular in remitting their current installment.
He also suggested that the rate of interest charged by the banks from BPL families in Self Help Groups should not be more than seven per cent, which is normally charged by banks for agricultural advances. Presently, banks are charging interest at the rate ranging from nine per cent to 12 per cent from BPL families in Self Help Groups.
Spelling out the reasons of farmers going into debt traps, the Chief Minister said that our banking system either did not supply the full amount of loaning needs of farmers or paper work was just too cumbersome. Sometimes Bank loan was not easily available in villages or was not available beyond official working hours. The banks should ponder over such left out loaning opportunities and come up with a comprehensive solution.
Stressing the need of launching a time bound campaign to cover all the eligible farmers under Kisan Credit Card (KCC) Scheme which is an important instrument for enabling farmers to avail hassle free credit. Still many eligible farmers were yet to get KCC.
Urging the Union Finance Minister to announce the decision to implement recommendations of Vaidyanathan package for revival of Long Term Cooperative Credit Structure, Mr Hooda said that there was an urgent need to implement Vaidyanathan package, as the reimbursement of Rs 325.27 crore to Haryana State Cooperative Agricultural and Rural Development Bank and its district level branches for its accumulated losses, which was promised in 2008-09 to Haryana Government had not so far been made.
He also requested the Union Finance Minister to triple the income limit for Differential Rate of Interest (DRI) scheme so that more people could benefit from it. He said that the eligibility criteria of Rs. 18000 per annum for rural area and Rs. 24000 per annum for urban area was too low to enable many people to take loans. The income limit should be state specific and in Haryana there was an urgent need to revise it. Moreover, Indira Aawas Yojna (IAY) beneficiaries were now eligible for DRI loans up to a limit of Rs. 20,000 but most of them could not avail DRI loans due to insistence on costly and cumbersome paperwork by Banks. Banks should find a reasonable solution to this problem.
Urging the Union Finance Minister to announce guidelines for the contributory pension scheme for informal sector at the earliest, Mr Hooda said that on the lines of the scheme announced in the Union Budget, the State Government had initiated the “Mahatma Gandhi Swavlamban Pension Scheme” for the members of milk cooperatives and cane growers’ cooperatives, wherein each member will contribute Rs.200 per month, the Society/Federation/State Government Rs.100 per month, and the Government of India Rs.1000 per annum. The contribution would go to a fund managed professionally as per the guidelines of the Pension Fund Regulatory and Development Authority. The fund would provide workers a retirement pension to support them in their old age.
The Chief Minister also urged the Union Finance Minister to allow Haryana to avail the benefit of the Central scheme- Aam Aadmi Bima Yojana (AABY) by converging it with Rajiv Gandhi Bima Yojana which is being implemented by the Haryana Government in place of AABY as it is more beneficial for the people of the State.
“While AABY covers only rural landless labourers in 18-59 age group, the state scheme covers all domiciles of Haryana in both urban and rural areas in 18-60 age group except income tax payees/government servants. Financial assistance is also much more than that of AABY in the case of death or disability”, he said.
