Notwithstanding investment support extended by government for agriculture in the State, the farmers have relied heavily on bank loans and private finance to fund their operations.

But, the banks were found wanting in extending loans which drove farmers to borrow from private lenders at interest rates ranging from ₹ 2 to ₹5 per month for every ₹ 100 borrowed. For a borrowing of ₹ 10,000 from private lenders, the interest works out to ₹ 5,000 per month. On the other hand, the bank interest would not have been more than ₹ 1,000 per month for the same scale of borrowing.

That the banks were lax in extending loans in Telangana was highlighted by none other than the Parliamentary Standing Committee on Agriculture. It said the banks fell short of the targeted loans by ₹ 10,000 crore in the last three years.

Low releases

In none of the six years since formation of Telangana State, the banks have achieved their target of loaning. The State-level bankers committee had set a target of loaning ₹ 30,649 crore for the current year (2020-21) which is supposed to go up to ₹ 33,713 crore on Central government’s instructions to hike the payout to farmers by 10 % in view of coronavirus. But, the actual release so far was only ₹ 500 crore.

The banks have always insisted that the farmers clear their outstanding before claiming fresh loans. But, the waiver of crop loans up to ₹ 25,000 by government this year has stopped farmers from repaying to banks. They were in the hope that the government will fulfill its election promise of waiving loans up to ₹1 lakh and, hence, not inclined to borrow afresh. Where the farmers repaid part of their old loans with interest, the same were being renewed but fresh loans were not sanctioned till the entire amount was recovered.

Letters written

In these circumstances, the State Commission for Debt Relief to Small Farmers, Agricultural Labourers and Rural Artisans wrote to the State government that the farmers were neither getting crop loans in time nor for entire area of cultivation. Thus, they were forced to approach money lenders at an interest rate of 36 to 48 % per annum.

The Commission has also written to Union Finance Minister Nirmala Sitaraman stating that nearly 40 % of farmers have not availed crop loans. The farming activity should be considered on par with micro, small and medium enterprises (MSMEs) and security free loans given up to at least ₹ four lakh on long-term basis. This way, farmers can save up to ₹ one lakh per year on interest portion of their private loans.

Commission Chairman Nagurla Venkateswarlu told The Hindu that the need for stepped up bank loans was all the more important this year because the government has decided to promote cotton cultivation which needs higher investment.