During pandemic, only 20 per cent of farmers under PM-Kisan had access to formal credit

During the period of severe economic crisis due to Covid-19 pandemic, only 20 per cent of farmers under PM- Kisan have had access to formal credit. Of the 10.5 crore farmers covered under PM-Kisan, only 2.18 crore farmers have been issued the Kisan Credit Card (KCC). This means that most small, marginal and landless farmers have continued to struggle throughout the pandemic.

The PM Kisan database only includes landowning farmers, leaving out landless farmers, tenant farmers and sharecroppers. Though KCC is supposed to be extended to livestock farmers and fishermen, it is not immediately clear if they were provided with a KCC.

According to a response given by Minister of Agriculture and Farmers Welfare Narendra S Tomar to a question by Congress MP Vincent Pala, banks have issued KCC for 2.18 crore eligible farmers and 2.5 crore farmers will be covered in due course. “During Covid period, Rs 84,600 crore was paid to 10.52 crore beneficiaries under the PM-Kisan scheme,” said the Minister in the response.

“Under the ‘Aatmanirbhar Bharat Abhiyan’ campaign government has set a target of issuing additional 2.5 crore KCCs by the end of year, as an important step in achieving this goal. This will ensure availability of cheap credit to farmers in the time of crisis and injection of nearly 2 lakh crore in rural economy,” added the minister to the question on the state-wise number of farmers left without any help from the government, without giving corresponding figures.

Much before the Covid-19 triggered lockdown, rural and agrarian distress was on the rise. The pandemic only exacerbated it. Most farmers faced an extremely challenging and uncertain sowing season and have had to rely on informal credit systems.

“Lack of access to formal credit, even in normal times, will force the farmers to borrow from informal sources at a higher interest burden. It increases costs and as a result reduces net returns. All these can further add to their distress, which is further amplified during a pandemic,” said Srijit Mishra, professor at Indira Gandhi Institute of Development Research.

“Nothing has substantially changed in the last seven years. We have a situation where access to formal credit for farmers is shrinking. If we look at the claims by the government on agriculture loans, more than half of these loans are not to real farmers, but to agri-business groups and corporate groups involved in agriculture. This has added to the issue. Only about 40% of the so-called agricultural credit is going to a real farmer. That is another indication that we have that formal credit is not reaching farmers,” added R Ramkumar, professor at Tata Institute of Social Sciences.

A lot of this credit is what has been given out by banks in urban and metropolitan branches of the banks and not rural or semi-urban branches of banks. This too shows that farmers are not the beneficiaries of these loans, said Ramkumar.

“Given this context, KCC numbers have not grown. A lot of KCC numbers have not been used. This raises the question of who is the recipient of these KCCs. This means it has not gone to a farmer. There is a wide gap between the number of cards issued and only 35% of these cards were active. In addition, a lot of KCCs are already loans which farmers had availed earlier,” said Ramkumar.

“In a recent paper on ‘Scale Neutrality in Indian Agriculture’ (Economic and Political Weekly, 26 June, 2021) we used some unpublished data for 2010-11 and observed that superimposing credit share to area share gives the impression that marginal farmers have a greater share of credit, but then this is not borne out when one superimposes share of borrowal accounts to share of operational holdings. This means that few among the so called marginal people get a higher share of credit. This calls for greater scrutiny of such data and the need to provide unit level details of such transactions,” added Mishra.

In many of the cases, the implementation of schemes is ineffective because the government sets a target and it is up to the banks to meet these targets. There is no mechanism to check who is been given these cards. These kinds of mechanical targets been given without checking the implementation at the ground level are not effective. The inherent asymmetry in access to formal credit worsens the ground reality for poor and marginal farmers.