Highlights of the Report of the Expert Group on Agricultural Indebtedness The focus of the Report is on the present state of agricultural indebtedness in its totality. The focus of the report is on agricultural indebtedness in the context of agrarian crisis. Agricultural indebtedness if not the root cause of the crisis but only a symptom and hence needs to be dealt in its totality. Though immediate credit and non-credit relief measures addressing the farming community are essential, the design and delivery system should be strengthened taking into consideration the diversity of farmers’ specific needs in different agricultural conditions of the country. Rescheduling of loans and relieving of interest burden up to two years in the case of farmers affected by natural calamities, drought conditions in rainfed areas and farmers in distress due to production crisis resulting from a multitude of risks are essential one time measures. The amount of interest waived should be shared equally by the central and the respective state governments. In many parts of the country farmers are burdened with high proportion of indebtedness to high interest bearing informal sources like moneylenders. Formalisation of informal debt is an essential step. The Expert Group recommends the initiation of the process in the distressed districts by creating ‘Moneylenders Debt Redemption Fund’. The recommends institutional ‘financial inclusion’ of farming community on a mission mode. One of the key recommendations of the Expert Group is improvement of the rural financial architecture that would improve timely and adequate delivery of credit to farmers by reducing transaction costs and improving the credit absorbtive capacity. In addition to strengthening existing institutions, agency banking, mobile banking, credit counseling and introduction of comprehensive Bharat Kisan Card (BKC) by using applications of information technology including biometrics, are some of the important ingredients of the recommended rural financial system. A major recommendation of the Group is improved deployment of Rural Infrastructure Development Fund (RIDF). The Group identified 100 ‘distressed districts’ and recommended deployment of Rs. 10,000 crore (of funds from the gap between shortfall of priority sector lending and the RIDF) for agricultural development programmes in these districts. One of the major institutional lacunae in agricultural credit system is the absence of farmers own organizations and participation in the financial delivery system. The Expert Group recommends that based on the model of self help group (SHG) federations of poor in Andhra Pradesh, the state governments should make efforts to facilitate the formation of federations of SHGs for farmers, especially for small and marginal. The present day agriculture is exposed to growing weather, pest and market risks. The Expert Group recommends the effective utilization of developments in information and space technology in crop and weather surveillance and price monitoring in providing effective crop / weather insurance to farmers. The Expert Group observes that small and marginal farmers will not be in a position to improve their standard of living by depending solely on agricultural income. It recommends measures to improve diversification of their sources household income and promotion of access to off-farm and non-farm activities. Expenditure on health is one of the sources of farmers’ distress and the Group recommends farmers’ health insurance scheme on the lines of the one implemented in states like Karnataka.
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