Recently, the state government and bankers traded charges on "faulty agri-credit" policies. The state government told bankers if they did not plan agri-credit by putting needy farmers on priority, the state government would do it on its own.
On the other hand, bankers blamed the state government for not covering all crops under loans. As a result, the number of marginal and landless farm labourers is on the rise.
The state has questioned target-oriented agri-credit plans, which are of no use to 6.7 million marginal, small farmers and landless farm labourers. The state demanded that the Reserve Bank of India intervene in the matter and ask banks to categorise farmers.
"We cannot finance a farmer who is a defaulter. We also cannot deny credit to a farmer who owns a luxury car. We have to welcome both the rich as well as the landless farm labourer. But banks have no system in place to extend credit by taking small, marginal and landless farmers on priority. After the completion of the loan waiver and debt relief scheme all farmers of the state are eligible for fresh loans," K Subbaraman, convener of the state-level bankers committee told Business Standard, adding, "the state government must cover all crops under the crop insurance scheme on priority so that farmers can repay. A defaulter cannot be sanctioned fresh loans."
The bankers in Madhya Pradesh say their credit-deposit ratio is above 67 per cent and agri-credit has been doubled. Strangely, the state's GDP growth rate is still below 3 per cent despite banks having shown 119 per cent increase in agri-credit from the targeted Rs 8,905 crore to Rs 10,612 crore in 2007-08.
"When such a huge amount of credit is available, why is the agrarian economy of the state not picking up like other states? Why can't banks segregate farmers, like small, marginal and landless labourers, and find out how much has been extended to them," asked Ranjana Choudhuri, agriculture production commissioner, in a state-level bankers' committee meeting recently.
She warned the bankers, "You have to boost the agrarian economy; if you don't we will do it on our own."
Speaking to this paper, she said, "Bankers have separate categories for manufacturing like large units, medium enterprises and small-scale units. Why do they leave farmers out? These days there are farmers who own Mercedes cars and there are farmers who even can't even afford a bicycle. The agri-credit plan should not be target-oriented."
There are 7.4 million farmers in the state, and of those 6.7 million are small and marginal farmers and landless labourers. The performance of various banks, particularly regional rural banks (RRBs), is in question.
According to the data available with Business Standard, RRBs have funded only 81 new farmers per branch per year, against laid-down norms of 100 new farmers per branch per year.
