The Wire: New Delhi: Saturday, September 08,
2018.
Government banks handed out Rs 58,561
crore to 615 accounts in agricultural loans in the year 2016. On average, each
account has been given over Rs 95 crore in agricultural loans.
This information was revealed by the
Reserve Bank of India in response to a Right to Information (RTI) application
filed by The Wire.
Agricultural loans incur lower interest
rates as compared to other common loans, and they are also given under fewer
preconditions than the average loan. These changes were made to make it easier
to give loans to small and marginalised farmers. At the moment, farmers are
given agricultural loans at the interest rate of 4%.
Kiran Kumar Vissa, the founder of the
farmers’ organisation Rythu Swarajya Vedika, said, “Many big companies involved
in agri-business are taking loans under the agricultural loans category.
Companies like Reliance Fresh come under the agri-business company category.
They engage in the buying and selling of agricultural produce, and take loans
under the agricultural loans category for the construction of godowns or other
such related activities.”
In order to give top priority and ensure
the development of some economic sectors in the country, the RBI has issued a
directive to banks that they invest a fixed part of their total loans into
sectors like agriculture, micro, small and medium enterprises, export credit,
education, housing, social infrastructure and renewable energy. This is called
priority sector lending (PSL).
According to the PSL policy, banks are
required to hand out 18% of their total loans to the agricultural sector,
targeting small and marginalised farmers. Vissa told The Wire, “The problem is
that banks are giving a big percentage of this to corporate and big companies,
as a result of which farmers are unable to avail these loans.”
He further stated, “Actually, it is pretty
easy for big companies to take loans under the PSL policy as the regulations
around giving the loans are lax and the interest rate is also quite low
compared to general loans. Banks hand out big loans so that their resources
remain intact.”
The Wire also filed RTI inquiries in all
zonal branches of the State Bank of India for state-wise data, but no branch
except the Mumbai zone revealed the information. SBI Mumbai zone stated that
the Mumbai City branch – one of the richest localities in Mumbai – has given
out Rs 29.95 crore in loans to three accounts.
Going by these numbers, each account has
been given almost Rs 10 crore on average in loans, whereas in the same branch,
more than Rs 27 crore have been given in loans to nine accounts. However, the
bank did not provide information on the names of the beneficiaries of these
loans.
Agricultural expert Devinder Sharma has
said that big corporations are being given loans at a cheaper rate after
pronouncements in the name of farmers. “There is just the charade of solving
farmers’ problems,” he said. “What kind of farmers are these who are being
given Rs 100 crore in loans? This is all a show. Why is the industry being
given loans in the name of farmers?”
Sharma says that banks also stand to
benefit from this whole process, and that is why such massive loans are being
given under the agricultural loans category. “Here, Rs 100 crore can easily be
given to a company. If the same amount were to be given to farmers, at least
200 people would be required. Banks are giving out such massive loans so that
their resources are depleted less and the target of 18% can be achieved soon.”
The National Democratic Alliance
government had kept giving out Rs 8.5 lakh crore in agricultural loans in
2014-15, which has increased to Rs 11 lakh crore in 2018-19. However, data
accessed by The Wire from the RBI reveal that a big chunk of this is made up of
massive loans. Agricultural experts say these loans are going to agri-business
companies and the industrial sector.
Agricultural loans are given under three
subcategories – agricultural debt, foundational agricultural infrastructure and
supporting activities. Godowns and cold-storages fall under foundational
infrastructure. For these, loans up to Rs 100 crore are given. Things like the
setting up of agri-clinics and agri-business centres fall under supporting
activities, and for these too the limit for loans is Rs 100 crore.
Data from the RBI reveals that massive
amounts have been given to people in the name of agricultural loans even before
2016. In 2015, 604 accounts received Rs 52,143 crore, which comes to Rs 86.33
crore per account, whereas Rs 60,156 crore (at an average of Rs 91.28 crore per
account) was given in agricultural loans in 2014. The same method was being
followed during the UPA government as well.
Where 2013 saw 665 accounts receive Rs
56,000 crore at an average of Rs 84.30 crore per account in agricultural loans,
698 accounts received Rs 55,504 crore at an average of Rs 79.51 crore per
account in 2012.
Kedar Sirohi, a farmer from Madhya
Pradesh and a member of the Aam Kisan Union, is of the opinion that the
government first traps farmers in a vicious cycle of debt, and when a farmer
wishes to take a loan in order to do better financially, he is harassed by the
banks. An ordinary farmer cannot even imagine that the government is handing
out loans to the tune of hundreds of crores to big corporate companies after
launching schemes in their name.
Sanjeev, a farmer, lives in Ittawa, Uttar
Pradesh, and farms over four acres of land. He says that a chunk of
agricultural loans is taken by the middlemen who help secure it. Some farmers
take loans under duress as they don’t have money, but even for this, they have
to make several rounds to the bank and face ridicule from the bank officials.
It’s a mystery who these 615 account holders are, who have received so much
money as agricultural loans.
Devinder Sharma says that the loans given
to farmers and agri-business companies should be separated. Farmers should not
be defrauded by giving companies loans under the ‘agricultural’ tag. Sharma
said he had made this suggestion in front of the finance minister, but no
reactions were received.