Half of farm households indebted: NABARD study

Half of farm households indebted: NABARD study

News:

1. 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:

1. The NABARD All India Rural Financial Inclusion Survey 2016-17 covered a sample of 1.88 lakh people from 40,327 rural households.
2. 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.
3. 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.

1. 46%- from Commercial banks
2. 10% from self-help groups
3. 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.