Tenant farmers rarely get bank credit. They don’t get any subsidies. Money lenders thrive on them because their loans cannot be waived. They also account for 80 per cent of farmers’ suicides in the country.

With farmers taking to the streets to highlight their issues these problems should be addressed. State level panel data of Nabard indicate that a 10 per cent increase in agricultural growth leads to a 2.1 per cent rise in GDP. Uneconomic holdings, lack of adequate credit flow and poor insurance cover to the tenant farmers prevents such growth. An inclusive growth agenda requires that tenant farmers’ issues of both debt and insurance be tackled.

Regional variations

Tenant farming exists with wide variations across States. It was 20.6 per cent of the operating area according to 8th round of NSSO Report in 1953-54. In 2002-03, it fell sharply to just 6.6 per cent of the operating area. Policymakers focused on abolition of feudal/semi-feudal agrarian structure with tenancy reforms aimed at conferring ownership right to tenants.

But post liberalisation, during 2003-13, tenancy increased to 10.4 per cent according to 70th round of NSSO Report. Andhra Pradesh (35.7 per cent), Bihar (22.7 per cent), Haryana (14.8 per cent), Odisha (16.9 per cent), Tamil Nadu (13.5 per cent) and West Bengal (14.7 per cent) lead the tenancy league, far above the all-India average of 10.4 per cent.

As the Indian economy becomes mature and inclusive, tenancy is likely to further increase. Land being scarce, there is severe demand for it. Urbanisation has made inroads into the rural landscape. Tenancy and sharecropping have become livelihood options in agriculture, to supplement incomes arising out of lesser availability of land.

Credit to tenant farmers

Even after the introduction of Kisan Credit Cards (KCC) and JLGs (Joint liability groups — ‘Bhoomi Heen Kisan’) tenant farmers received barely three per cent of total farm credit, according to some private studies, a tad more than the official figures show in NSSO.

Loan waivers have not helped tenant farmers. It was reported that in 2014, out of the total loan waivers of ₹59,000 crore announced by Andhra Pradesh and Telangana, tenant farmers got next to nothing, since a significant number of crop loans are availed by the land owners even when they are not the actual cultivators.

Tenant farmers with no documentary evidence became ineligible for crop insurance under PM Fasal Bima Yojana. Agricultural insurance needs to be decoupled from crop loans. Farmers’ assets — crop husbandry, animal husbandry, poultry, horticulture and family assets — need to be insured irrespective of owned or leased-in to insulate farmers from the debt burden.

Lending pre-requisites

While Kerala is the only State that enacted the Money Lending Act protecting borrowers from usurious rates of interest that incidentally protected tenants from excesses in private debt, both Andhra Pradesh and Telangana have addressed this issue in two different ways.

The AP government has adopted and refined the implementation process under the AP Licensed Cultivators’ Act 2011 with digitisation of land records and creating a webland portal. Loan Eligibility Cards (LEC) or a Certification of Cultivation (CoC) is issued by the designated authority of revenue or agriculture department. A standard operating procedure has been put in place for the banks to record the crop loans issued to all farmers including tenants on the webland portal.

The Telangana government did not annul the AP law, but took up a massive drive for digitisation and cleaning up of land records under the Dharani project (Telangana Land Records Management System). This is being implemented for direct transfer of ₹4,000 per owner-farmer per acre per crop season to meet the input needs. Besides, farmers are entitled to ₹5 lakh insurance with the LIC, with the State paying the same. Tenant farmers are, however, not eligible.

Possible solutions

Creating a legal framework for the States, issuance of loan eligibility cards, ensuring that banks lend to cultivators and not owners, creation of web-based land portals after digitising land records, setting targets for short-term production credit for tenant farmers, formation of JLGs — such steps can improve matters for tenant farmers.

Direct cash transfer to tenant farmers following an affidavit of self-declared tenancy conditions and crop(s) grown and insurance of the tenant farmers and their assets would provide a better option.

Nabard can set up a Tenant Farmers Development Fund to refinance short-term credit, assist JLGs, SHGs, FPOs, and pay crop insurance premium for crop loans less than ₹1 lakh, besides providing skilling and calamity relief.

The writer is an economist and risk management specialist

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