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Half of farm households indebted: NABARD study
News:
- According to a recent survey by the National Bank for Agriculture and Rural Development (NABARD), morethan half the agricultural households in India have outstanding debt.
Important facts:
- The NABARD All India Rural Financial Inclusion Survey 2016-17 covered a sample of 1.88 lakh people from 40,327 rural households.
- Only 48% of these are defined as agricultural households, which have at least one member self-employed in agriculture and which received more than Rs 5,000 as value of produce from agricultural activities over the past year, whether they possessed any land or not.
- Key highlights of the survey :
- The survey pointed out that their average outstanding debt is almost as high as the average annual income of all agricultural households.
- The survey found that 52.5% of the agricultural households had an outstanding loan on the date of the survey.
- For non-agricultural households in rural India, that figure was 10 percentage points lower, at only 42.8%.
- Agricultural households reporting any outstanding debt also had a higher debt liability compared with non-agricultural ones.
- The average debt of an indebted agricultural household stood at approx Rs 1 lakh in comparison to Rs 75000(approx) for indebted non-agricultural households.
- The average annual income of an agricultural household is approx Rs 1 lakh, more than the average outstanding debt of indebted farm households.
- Only 10.5% of agricultural households were found to have a valid Kisan Credit Card at the time of the survey.
- The Scheme aims to provide farmers credit from the banks with a simplified and flexible single –window procedure.
- Households who had the card utilized 66% of the sanctioned credit limit.
- The biggest reason for taking loans among agricultural households was capital expenditure for agricultural purposes,with a quarter of all loans taken for this purpose.
- Around 19% of loans were taken for meeting running expenses for agricultural purposes, another 19% were taken for sundry domestic needs.
- Loans for housing and medical expenses stood at 11% and 12%, respectively.
- While all classes of farmers had debt, the highest incidence of indebtedness came from those owning more than two hectares of land.
- Among small and marginal farmers owning less than 0.4 hectares, slightly less than 50% of the households were in debt.
- Those with more land were more likely to have multiple loans.
- The economically better-off households are more eligible for taking loans as they have enough assets to serve as security against the loans taken.
- State wise figures:
The southern States of Telangana (79%), Andhra Pradesh (77%), and Karnataka (74%) showed the highest levels of indebtedness among agricultural households, followed by Arunachal Pradesh (69%), Manipur (61%), Tamil Nadu (60%), Kerala (56%), and Odisha (54%).
- Farm households took less than half their loans from commercial banks.
- 46%- from Commercial banks
- 10% from self-help groups
- 40% from non-institutional sources (friends, relatives, moneylenders, landlords).
- A sizeable 11.5% households exhibited dependence on local moneylenders and landlords, which exposes them to exploitation by having to pay exorbitant interest. These are mostly poor and illiterate people.