Rescheduling crop loans: look beyond statistics, AP tells RBI

With the Reserve Bank of India Governor Raghuram Rajan expressing reservations about rescheduling crop loans in Andhra Pradesh and Telangana, AP has yet again sought to impress upon the bank to reconsider its decision.

The State Government in a communication to the RBI has asked it to look beyond statistics and cited instances of farmers’ suicides in the State.

After the Credit Policy, the RBI Governor had stated only in conditions where the agriculture production has dropped below 50 per cent due to adverse seasonal conditions that crop loans could be rescheduled. This has put both the Telangana and AP Governments in a piquant situation. The State Chief Secretary IYR Krishna Rao, in a communication to the Executive Director of RBI, has requested the rescheduling the crop loans and sent in a detailed analytical note on the agricultural situation during kharif 2013-14.

The State highlighted the series of calamities in the past few years which had impacted the overall agriculture production and farm incomes, which were beyond the control of farmers.

With the growing commercialisation of agriculture, the magnitude of shock due to unfavourable eventualities has increased and the need to protect farmers against production and income losses has become stronger, he explained..

Referring to the RBI Master Circular on Guidelines for relief measures in areas affected by natural calamities, the State mentioned that “Statistics are pliable but facts are stubborn. Statistics are no substitute for judgment.”

The reference to crop yield needs to be done in an appropriate manner keeping in view also the remunerative prices and the circumstances. It further stated that comparing yields to judge the status of the farmer will be a lopsided approach.

It cited the crisis in the micro credit system in the State during 2010 leading to suicides caused by widespread indebtedness.

The State further mentioned that with all institutional finance shut for them, the farmers are forced to depend on moneylenders, landlords and microfinance institutions.

Since the kharif season has already started, and farmers are awaiting fresh crop loans, the RBI has been requested to approve conversion/reschedule of crop loans in affected areas.

The State Chief Minister, N Chandrababu Naidu, on Thursday reiterated the Government’s commitment to implement the loan waiver scheme.

Addressing the District Collectors, he said the Government will again take up with the RBI the loan rescheduling issue even as other plans are being worked out.