Politics and Economics of Crop Loan Waivers

Cost of Crop Loan Waivers

SBI Chairman Arundhati Bhattacharya’s impromptu remarks on loan waiver promises of the States to the farmers have attracted the politicians’ ire. Equity and discipline are two sides of the coin of farm lending. If the Banks maintain equity, and care for lending discipline more, borrower discipline would not take a toll.

Loan waivers announced by the State Governments should be met by the state exchequer and not the centre, Venkayya Naidu, the Union Minister said. But when the BJP announced it, decrying the earlier moves of AP and Telangana Governments, it gained political traction and the states demanded a cake in the bargain from the centre with several like Maharashtra, Tamilnadu, Karnataka joining the chorus. Have farm loans become unviable and farmers untrustworthy borrowers? Are there no alternatives to rescue the farmers’ woes?

Unfortunately, lending discipline is lax. Roll over of crop loan with interest as a new loan (this we call book adjustment) and a small incremental credit for crops that take more loan component than that is actually grown on the field has become the order of the day. In South India, it is jewel loans that get accounted for as crop loans. Otherwise one cannot find an explanation for only 20.9% of crop loans getting insurance cover against the mandatory debit of premium for all the crop loans disbursed.

Some grameen banks are debiting processing fee and inspection charges for crop loans and that too without the borrowers knowing it. On top, they charge interest on those debits if not able to recover them.

Arm chair lending even for farm sector has become the order of the day due to inadequate or lack of field staff. Earlier, controlling authorities and even top management used to visit the adopted villages as a semblance of identifying with rural credit activity. One is hard put to find such visits. These are not wild allegations, but facts that came out during the crop loan waiver evaluation done in Telangana by the Development and Research services private limited.

Farmers did not fail the nation in spite of failure of the monsoons, failure of governments not releasing the promised incentives in time, insurance failing them year after year and markets ditching them on the price front. But bankers failed the farmer and the nation with absolute impunity. Any crop loan target set for them by the government is shown to be achieved.

Earlier Loan write offs of 1990 for Rs.10000cr and Rs.70000cr of 2008 were a political stroke and were criticised for lax implementation by the CAG Audits placed before the Parliament.

Telangana Government waiver scheme covers only institutional crop loan including jewel loans outstanding as on 31^st March 2014 up to Rs.1,00,000 per farmer family, spouse and dependent children. It defined eligible short term production loan as loans given for raising crops that are to be repaid within 18months and includes working capital loan for traditional and non-traditional plantation and horticulture. Claims are reimbursed by the Government on the basis of a certificate from the bank that the waived amount has been actually credited into the farmer’s account.

Every lending institution is mandatorily responsible for the correctness and integrity of the list of eligible farmers under the scheme and the particulars of loan waiver in respect of each farmer. All the bankers are expected to provide fresh loans as the existing liability up to Rs.1lakh per farmer family has been picked up by the state government under the scheme.

Evaluation exercise revealed that the farmers to the extent of 70% are happy with the reprieve given to them particularly because they were affected by severe drought for two years in a row although they were unhappy that the waiver instalments were released late leading to delay in release of fresh crop loans by the banks. Fresh crop loans were inordinately delayed in 60 to 70 percent cases during 2014.They wished that the state government would have released in one single go the announced benefit.

55.5% was the share of the crop sector in the total agriculture loans. Government of Telangana agreed for writing off crop loans to an extent of Rs. 16,160crores constituting 76.19% and gave detailed instructions to the banks after consulting the SLBC.

The State having more than 80 percent of small and marginal farmers with loans from multiple institutions and also from private lenders and traders faced problems in addressing the competing demands on the claims for waiver.

Banks’ loan books and farmers’ land record passbooks proved equally non-transparent. Borrowers as well as their parents with identical names figuring in different banks posed impregnable identification issues requiring over six months for resolution at the sub-district level before the first instalment was released.

Average loan amount subject to waiver was a little less than Rs.55000 per farmer family against the announced Rs.1lakh.

Major Public Sector Banks had gross NPAs in Short term crop loans of the order of 2.4% in 2016 as against nearly 8% in 2015.

DRS study came to the conclusion that loan waivers are not a permanent solution to the recurring problems of the farmers either due to man-made or natural calamities.

Solution lies in appropriate insurance mechanisms with individual farmers and income insurance as focus and not the crop insurance that takes threshold limits of crop yields based on area affected historically.

South Korea that supports agriculture sector ranking top among the world’s highest subsidy providers, offers excellent example in this direction.

Korean farmers also get the benefit of a comprehensive agricultural insurance scheme managed by the National Agricultural Cooperative Federation (NACF) with reinsurance support on a quota share basis from a group of domestic reinsurers. The government supports the scheme in four different ways i) provides 50 percent premium subsidies for crops and livestock; ii) acts as a reinsurer of last resort for the liability in excess of 180 percent local market loss ratio;(iii) 100 percent of the NACF’s crop insurance operational expenses and 50 percent of livestock insurance operational expenses are subsidized by federal government budget; and (iv) It participates in product research and development. The insurance coverage in Korea is voluntary.

It will be worthwhile investment on the part of government both in terms of time and resources to provide sustainable income insurance to the farmers on a pan India platform on similar lines, so that the recurring demand for the loan write offs can be warded off.

*The author is an economist and risk management  specialist and part of the DRS Study Team.

 http://telanganatoday.news/cost-of-crop-loan-waiver/250317

Budget 2016 Transformational Budget

Karl Marx once said speaking of the goals of economic satisfaction: ‘each according to his needs’ (communists achieved it); ‘each according to his ability’ (capitalists achieved it) -- extend this to each according to his greed (modern economies surpassed). Democracy means great expectations and the FM has to meet these expectations in the most unenviable challenging environment.

The stunning defeat in the States’ elections during the year made the FM look at Rural India, agriculture, irrigation and infrastructure in this budget as key to regain its political prominence. Noses ground to the soil made different voices allocating more than 8% of the budget 16-17 to agriculture, rural development and irrigation. The Economic Survey forebode it to a degree.

Economic Survey 2016 read between the lines indicates that the economy would travel in uncertain growth territory due to weak growth of world output (around 3%), declining commodity markets, turbulent financial markets, and volatile exchange rates. The current expectation of 7-7.75% growth during the current year and 8% in the succeeding years is the hopeful. Agriculture sector constituting around 15% of GDP at current prices having 60% of population dependent on it just ended with 1.1%; manufacturing with Make-in-India push surged to 9.5% and services in spite of start-up and digital India efforts slackened to 10.1%.  Unless manufacturing start-ups attract angel funds in a big way it would be difficult to show a double digit growth in the sector as the credit markets are weak.

Pre-Budget 2016 last strokes

Budget Run Up – The Last Strokes

The long wish list of the budget 2016-17 in the double-digit growth pitched economy has GST implementation as the top agenda and implementation of recommendations of Justice Eswar Committee on tax reforms as the second top item.

Farm sector and rural development find a big surge in the budget run up news columns. Declining credit is a cause for worry in these sectors as the banks hit by NPAs and loan write-off are in no mood to oblige the farmers. Agriculture infrastructure targeting market yard digitisation and revamp calls for a big ticket from the challenging budget 2016.  A separate budget for agriculture would have made lot of sense but the government has no such plans. Still hopes ride high in this sector.

Make-in-India requires a big manufacturing push and this is possible mostly with the MSME  sector that has so far drawn little attention.

MSME  Ministry recently redefined the eligibility criteria whereby the aggregate value of the Plant and machinery under the same ownership located anywhere will be reckoned to classifying as MSME, providing for vertical growth. This will correct the distorted subsidy regime engendered by horizontal growth.

Debt and Disaster

Disasters may be frequenting the coastal regions. But not like the one that we saw in Chennai till yesterday, in the recent history. It may take months for the city to recover from the shock and may need billions of rupees for recovering the lost infrastructure and assets. This signifies that no disaster will be like its predecessors and they manage us and not us managing them.

The estimate for the insurance sector outflow for the rescue has been put at a measly Rs.500cr.  It may have excluded the assets insured in the financial sector. Several industries, export-oriented auto components industry, leather industry, several MSMEs alone have assets worth around Rs.2lakh crores in and around Chennai, the marooned metro for a century.

Ending Debt Cycle Suicides in Telangana

http://www.thehindubusinessline.com/opinion/ending-the-debtsuicide-cycle-in-telangana/article7671053.ece

The State government can take a leaf out of Kerala’s book and enact a law against usury

Recently, the Telangana Agricultural Advisory Forum, consisting of a few university professors and scientists, deliberated on the causes and consequences of the drought and farmer ‘suicides’ in the State. The unofficial number of suicides attributed to farm families is 1,152.

An inquiry into some of the recent suicides reveals an interesting picture. The farmers were not indebted to cooperative credit societies or commercial banks. The case of a farmer in Nalgonda district is typical. He took on lease ten acres of land, dug five bore wells — none of which hit water — incurring huge private debt in the process. On top of this, he cultivated cotton. The crop failed without water, and the debts pushed him to suicide.

Banks threatened with huge NPAs

There is a report in First Line that a Collector from Amravati threatened action against bankers for not reaching agricultural loan targets in a quarter under IPC. This is sheer arrogance on the part of the District Collector who does not know his job. There is another report of the UBS on the mounting NPAs in the Live Mint of 7th July 2015. Reading together becomes necessary.

UBS Report has been contested by 'Yes Bank.' while the other banks chose to ignore. The fact remains that the corporate debt today occupies major portfolio of banks. There is excessive interference from the administration in public sector banks.

Take for instance, the story of Maharashtra Government where one of the district collectors audaciously threatened the banks for not achieving the targets in farm lending as per his dictate just a couple of days ago. The news appeared in First Line. The banks in the coordination forums - District level Consultative Committees of which the Collector/DM is the chairman, have never pulled up the district administration for failing to provide reliable land records, for failing to provide the credit related infrastructure for farm schemes to succeed and they mention in their Annual Credit Plans and NABARD in its PLP for the administration to respond adequately. The Administration never adequately responded.

When the 20-point programme was introduced initially, District Collector, Guntur reacted similar to that of Maharashtra District Collector threatening with criminal action for failing to reach the targets under the programme in 1979. The entire banking community walked out of the DCC asking the Collector to go ahead. The then Secretary Planning Govt of AP had to counsel the Collector to behave!!

Thanks to the Live Mint for the chart.

Such interferences do not mean so much as unseating the top executives for not lending to the corporates or for taking any action on the NPAs of delinquent corporates that today reached unsustaining levels. The action on the top executives range from transfer from the portfolio handling to transfer out of place. These are taken without demur as no person would like to be at the risk of his career. The obliging top executives and Chairmen get the plum posts. Such games from the Banking Department should stop. Narasimham Committee -1 recommended in 1991 in its maiden report itself, that the time had come for the banking department of the GoI be wound up and stop regulating banks. This recommendation should be revisited by the GoI in the interest of healthy reforms to the financial sector. .

Growth of the economy at 8%?

250mn poor of India are being ruled by over 500 crorepatis in the Parliament and thousands of such legislators in states. Arvind Panagariya, Vice Chairman NITI AAYOG would like to believe that the growth of the economy would hit 8% by the end of this year.

AGriculture with its 13.7% share in GDP providing sustenance to about 50% of population still is posing risks to growth. So is the MSME sector, not still the darling of credit agencies. Exports did not rise significantly during the first quarter.

One consolation is that on the external front we seem to be doing fine.Watch this in the backdrop of one week's closure of Greece Banking and Stock Markets.


 In fact, while one would very much like to be optimistic, the dreams of make in India being still in the dark, uncertainties on the farm front, manufacturing yet to gain, the buoyancy of tax collections still to surface, the sovereign debt continuing to rise, and the hidden inflation at embarrassing level, the hope of 8% for 2015-16 that too from the Aayog Vice Chairman is really fond. Adding fuel to fire is the current Greek Debt Crisis impacting on our engineering exports and rising exports is the hope of Arvind Panagariya.

Farmers Hurt

Farmer Hurt and Farming Needs Innovative Push

Priority Sector Credit Policy to Synchronise

The Scenario:

Agriculture, India’s largest employer is undoubtedly the engine of India’s economic growth. Agriculture is constitutionally a State subject, but, in practice, all policy decisions in its activity chain like Agriculture Credit, Procurement, MSP, fertilizer allocation and subsidy, and relief measures, etc., are in the domain of the Central Government. Indian farmer and the entire value chain in the farming sector, as a consequence, is strangulated by regulations of over twelve ministries of GOI and at least six ministries of the State Government.

While the priorities should be on improving soil health, conserving water and improving markets for assuring reasonable prices for the farmer, the present Government misplaced its priorities to introduce Land Acquisition Bill that now got into the second ordinance faced with stiff opposition on the floor of the house and in the streets of North India.

Governance Reforms Imminent

Banking on cooperatives is better business

Cooperatives are wealth creators:

The need for cooperatives in wealth creation arises mainly due to the reason that a cooperative can create more value or surplus than the individual can. Conceptually, if a cooperative is well run, it will bring more benefits to its members. The organization and management of a cooperative enterprise, however, is complex. It is more complex in the case of rural cooperative credit structure as (1) this structure is part of the overall financial structure and has a contributory responsibility to the financial stability (2) it has to abide by the regulatory policy and procedures and (3) its capital structure demands continuing infusion of capital under Basel III.

Politician promises and Regulator disposes

Politician promises and Regulator disposes

There is an old adage that a farmer is born in debt, lives in debt and dies in debt. No farmer has liquidity when he wants cash in hand, for it lies either in land or stock. Farmer is today a part of the rule book, both with Governments and the financial institutions and the regulator.

AP and Telangana both the States, after formation, did not lose a minute in negotiating with the RBI the way forward to realising their hasty loan waiver promises. The States tried to bargain hard for restructuring the loans till they could find resources to fully credit the promised waiver amount into farmers’ loan accounts. The logic for waiver could be disputable but the request for restructuring on the sovereign guarantee has less reason to be faulted. This cannot be dubbed away as ’crony socialism’ – the meaning of which the creator of the phrase alone has much to explain.

The history of farm loan waivers – a sad one—politically motivated could have been resisted by the regulator even during the years 1990 and 2008. When the commercial banks were writing off loans of various other sectors but failed to respond to the farmers’ requests even amidst a do-or-die situation, the governments took law into their hands and claimed equity in debt treatment. In a political economy, howsoever puritan the economists are, the will of the politician prevails, particularly in democracy.

The Winner and the Vanquished

The Winner and the Vanquished

Decidedly the World’s greatest democracy has just finished its biggest General Elections – the fifteenth in a row. It attracted lot of attention of the western media – the Economist, the Financial Times, The Guardian, The New York Times just to name a few. Money, liquor and raining promises like never before greeted the electorate. It was however the last NDA alliance – the TDP-BJP combine with an emotional entrant into the political confabulations that has been greeted with enthusiasm from some and contempt by several. Narendra Modi the first ever PM designate to bow to the Parliament stairs before his entry, demonstrated cultural excellence unparalleled setting the tone for virtuous move forward.

Manifesto for Agricultural Sector: Agenda for Future

Manifesto for Agricultural Sector: Agenda for Future

‘If farming fails nothing else succeeds in this country.’ Economic growth of this predominantly agrarian country depends on agricultural growth.

Target 6% growth of farm sector for an assured double digit sustainable growth of the economy.

Allocate Budget – at least 10% of the outlay should be devoted for agricultural sector.

Present Agricultural Budget in all the predominantly agricultural States preceded by Agricultural Survey.

The Myth of Poverty Alleviation

The Myth of Poverty Alleviation

When the General Elections to clearly the biggest democracy in the world are on cards with the participation of over 83million voters all eyes will be on the agenda of the contesting political parties. One item, for sure, is poverty alleviation. The UPA during its decade rule has been trumpeting on taking the growth trajectory northwards and as a consequence reduction of poverty. Claims and actual achievements apart, is it possible to eliminate poverty in any part of the world? Has economic growth contributed to its elimination in any part of the World ever since the end of Second World War?

Scripting the culture of change

The Chairman scripting the culture of change
It was 20th July 1972 sunny morning. In Visakhapatnam, no English daily would reach the morning readers to relax with a cup of coffee in the early hours of the day. The cool sea breeze on the long verandah was all that was available.

The previous day was tiresome as I spent the whole day till about 10p.m., in the village near Tallavalasa 30kms East of Visakhapatnam taking documents at the village for 90 crop loans I was to disburse, as Agent, Agricultural Development Branch of the SBI. Suddenly, the telephone rang uninterruptedly in the hall, as if it was a wake-up call. I picked up the phone. It was Development Manager (Agriculture) V.S on the line. First question: Did you see the paper today?’ No: was my reply. He said: ‘There is a box item in all the dailies on what you said in the village.’ I replied: Sir, I do not remember to have told anything to the press as I was only taking documents for the Agriculture Cash credit I programmed to disburse.’ The Box item reads: “SBI takes 400 odd signatures even for a hundred rupee loan. B. Yerram Raju, Agent , Agricultural Development Branch, SBI, Visakhapatnam confirms this, while disbursing crop loans for about 90 farmers in Tallavalasa village.” UNI. (I was told that all the dailies carried the item. Later in the month, all the magazines carried the item as a Box item.)
Then I said: I remember that the UNI Correspondent having come to know that the Bank is going to the farmer instead of the farmer coming to the village came to the village and sat through the whole day and must have sent the dispatch. I only confirmed his observation. Then he said: “dear raju: You know the Chairman Shri R.K. Talwar is here in Hyderabad. Yesterday, the Union Minister for Finance, Y.B. Chavan and the Chairman inaugurated the State Bank Staff College and the PR people had put in lot of efforts to put the picture in the front page and down below the photo this box item appeared.” Then I realized what the item caused.
Quickly followed a few more calls: from the Staff Superintendent, District Superintendent, the Regional Manager VNVP Rao – all calling, as if, for my explanation!! My RM said: The Chairman would like you to fly to Hyderabad today and see him by lunch hour.’ There was only one Dakota flight of Indian Airlines from Vizag. I immediately rushed to the Airport after managing the ticket.
I reached at 1p.m and went to the Local Head office to meet my RM and Development Manager. They accompanied me to the Chairman, who was about to go for lunch. “Oh, Yerram is here. Come; let us talk over lunch, he said. My shiver in the pants ceased. Then he asked the Development Manager: did you count the number of signatures on the cash credit document and Demand Promissory Note with the take-delivery letter that the farmer had to sign to get crop loan from us?” He said: “yes sir: it numbered to 427.” Then he asked me: how much time you took to complete the documentation for the 90 farmers? Sir, I and two of my field officers took about 13 hours in the village. We have to complete the disbursement before the cropping season ends in another week to ten days and we have 2000 crop loans to disburse in 30 adopted villages of the bank; even the appraisal form is nine pages , I said. What is the solution?
Sir, “Canara bank takes only a four-page simple document. When the law of the land is same for every bank, why should we take a cumbersome 9-page cash credit agreement? Each blank filled, addition, alteration, etc require the borrower’s signature and under group guarantee, the guarantors’ signatures or LTI. Each illiterate farmer’s thumb impression needs witness of two known persons. All this makes up for the number 427. We have to disburse tens of hundreds of loans in a number of villages ahead of the season.” The doyen of bankers understood the problem. He asked the Development Manager to go over to Bombay Central Office, the next day along with the solicitors from Madras. The team was to work out simple crop-loan documentation within a week’ time. I was to go along with the team to perfect it.
The result: simplified documentation and appraisal procedure for crop loans. This anecdote left an indelible impression on my career as a banker.

అగ్రిచుల్తురె, పొలితిచ్స్ అండ్ Credit

: AGRICULTURE, POLITICS AND CREDIT:
B. YERRAM RAJU*

The eight-day fast of the Opposition leader of Andhra Pradesh in the cause of a host of relief agenda for the farmers unfolded yet again the nexus between agriculture and politics. Many questions and few answers emerge from the episode in a State that still has a share of 23.9 percent (at constant 1999-2000 prices) in State GDP in the primary sector. There would appear to be a peculiar psyche of the farmers and the downtrodden. 62.2 percent of working population in the State is still dependent on rainfall and this is copious during the season – but at wrong time and with heavy flooding of farm fields destroying either the total crop or rendering unsuitable for consumption. The gross area sown in the State has gone up to more than 140lakh hectares during 2010-11 compared to 135.67lakh.ha. According to the State Government acreage under irrigation increased by a little over 5lakh ha.

The total food-grain production in the State reached an all time high of 204.21lakh tons during 2007-08 even amidst the adversities. Credit disbursed under priority sector in the State jumped from Rs.24346cr in 2004-05 to Rs.51487cr by March 2009 despite a host of relief and write-off packages in the interregnum. The estimated crop loss in paddy, cotton, and tobacco alone, not to speak of vegetables and other stored crop is in a little over 5lakh ha. Under the RIDF, NABARD created additional irrigation potential to an extent of 21.58lakh acres that enhanced the demand for credit from those farmers. Last year there were torrential rains and flooding of the most unusual order in Kurnool and other districts that led to the worst-ever flood calamity that still haunts the State Government due to poor delivery of the announced relief packages.

Then there is a spate of suicides on one count or the other. And yet the spate of farmer-suicides in December 2010 alone touched 137 – and just in October and November 2010 we heard of the suicides of the micro-finance victims in good numbers. Last year, there were suicides to bemoan the death of the former Chief Minister, YSR. Cash relief was announced to all these suicide-affected families from time to time either from the exchequer or the political parties. 63.41lakh farmers in the State got relief under the All-India Agriculture Debt Waiver and Debt Relief Scheme, 2008 to the extent of Rs.11353cr. 37lakh farmers got the benefit under the State Government relief package of Rs.5000 per farmer not covered by the AIDWDR to the extent of Rs.1820crores. The 16-suicide prone districts got the PM’s special relief package of Rs.9650.55crores. The package included interest waiver, loan reschedulement, irrigation, watershed, animal husbandry, plantation and horticulture etc. Where all these relief packages got delivered? Were they delivered in full? Why this phenomenon of suicides is rampant in Andhra Pradesh compared to the rest of the States that faced similar natural calamities. Is it inadequacy of package or improper delivery of the package or the agrarian structure or a combination of all these responsible for the politicians to reap a rich harvest?

State Government from time to time announced a slew of packages:
• Organic farming with an outlay of Rs.31cr to encourage use of vermin compost and improve soil fertility;
• Seed village scheme with the supply of foundation seed at 50 percent cost
• National Agriculture Insurance Scheme with village as insurance unit;
• Pilot weather based Insurance Scheme
• Farmers’ field school;
• Agriculture Technology Management Agency with 90:10 :: Central Government :State Government
• 3percent per annum rate of interest for prompt repaid agricultural loans
• Revamping the rural cooperative credit structure under Vaidyanathan package with about Rs.2100cr of which Rs.1872cr already released;
• Increased power supply to the farm sector at an enormous subsidy.
• Special efforts to increase area under pulses
• NABARD provided liquidity support to the State Cooperative Bank and RRBs to tide over the temporary liquidity stress caused due to implementation of relief packages of the order of a little over Rs.50000cr.
Still, not all the perfumes of Arabia could sweeten the little hands. The consumer in Andhra Pradesh, known as granary of rice, supplying huge quantity of rice to the central pool, pays Rs.25-30 a kg.

Structurally, the State has the largest sub-divided and fragmented holdings; there were no mutations carried out; owners migrated with farm riches to the urban and metro areas with investments in real estate, hotel and film industry. Nearly 85percent of the actual farmers are leaseholders and yet the joint liability group finance ‘innovated’ by NABARD (it is actually a rehash of the aborted group lending scheme of State Bank in the 1970s) did not take off. State Government’s persuasion also did not succeed with the Bankers in an environment of distrust and high risk of the clientele prone to high political interference with every party demanding at the time of repayment a write-off. Most of those who demand for such write-off are private money lenders and they have a vested interest in such write-off so that the money they lent could easily get recycled. I wish a detailed study into this aspect by an independent institution would disprove this hypothesis.


In a study undertaken by the author in 2007 on farmers’ suicides, the revelation was that the costs of agriculture continue to rise with no corresponding rise in returns – this is accentuated further with the implementation of MNREGA that pushed the labour costs to nearly 40 percent of total production costs compared to half of it a decade back driving many to move to substituting with technology; ever widening social divide in the villages and inexplicable leakages and private lending at huge cost. Despite all that the Banks show as flow of credit to agriculture, how many new farmers and how much of new credit and for what new projects had access to such increase leave many doubts than answers. Periodical write-off of credit is a serious disincentive to the flow of farm credit as equity and payment ethics are running counter to each other. You can’t keep on demanding write-off of credit and yet ask bankers to keep increasing credit flow. Bankers justifiably view lending to agriculture as a high-risk portfolio not withstanding the more favourable risk weights released by the RBI to respond to Basel II capital adequacy norms. The politician knows it and various committees in the past clearly voiced against the write-off and yet, both the centre and state governments indulge in this wasteful luxury. Are the politicians chasing wrong ends? If so, what is right? Nowhere in the world farming progressed without timely and adequate credit that get recycled with prompt repayments and insurance and guarantee mechanisms to respond to natural calamities appropriately.

Too many institutions claim support to farmer absorbing most of the subsidies and grants more by the deliverer than the farmer. There are twelve ministries from Government of India that have to join to decide on any support system for the farmer. Added to this there are at least five ministries at the State level that require cohesion. None of them joins a round table even once a year to reduce the institutional burden and increase the delivery of benefits to the farmer – whether it is input subsidy or rate compensation or market access. Environment and weather are hostile. Exploitation is at the hilt. Still, the farmer is feeding this country! Series of reliefs and loan reschedulements are like the serial bombs that would explode in the hand that holds. Series of reliefs and loan reschedulements are like the serial bombs that would explode in the hand that holds. We have to find solution where the problem exists. There is a nexus between agriculture, politics and credit in this democracy where illiterate vote bank is the raison de etre for a politician’s saddle.
(The Author is an economist and presently Member, Expert Committee on Cooperative Banking, Government of AP. The views expressed are personal. Can be reached at yerramraju@yahoo.com)