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Farm loan waiver bad? Data shows true picture

The share of agri and allied sector in the gross NPAs of scheduled commercial banks is only 9-13%, shows latest data

Published: 17th February 2020 07:59 AM  |   Last Updated: 17th February 2020 07:59 AM   |  A+A-

Express News Service

NEW DELHI: Many economists might have reservations over farm loan waivers in view of such waivers turning non-performing asset (NPAs). But the latest data shows that agriculture sector has only 9-13% share in the gross NPAs of the scheduled commercial banks in the country. However, the Reserve Bank of India data shows that the share of agricultural sector in NPAs has gone up in last three years, which points towards the deteriorating condition of the sector and the increasing inability of farmers to repay their loans.The data shows that out of the total `8.8 lakh crore of NPAs in 2018-19, nearly `5.80 lakh crore pertained to industry and the remaining `1.11 lakh crore to agriculture. 

According to RBI data, gross NPAs of banks in the year 2016-17 stood at `7.28 lakh crore of which only `62,311 crore pertained to agriculture and allied activities while `5.26 lakh crore pertained to the industry sector. This means agriculture and allied sector’s share in gross NPA was around 8.5%. In 2017-18, the gross NPAs of the scheduled commercial banks increased to `9.63 crore — `85,482  crore of agri and allied activities and `7.04 lakh crore of the industry sector. The share of agriculture in gross NPAs was 8.9%, showing a marginal rise over the previous year.

However, in 2018-19, the gross NPAs came down to `8.80 lakh crore while the share of agriculture and allied activities in it increased to to 12.7% of the total  or `1.11 lakh crore.This is despite the fact that government has announced various initiatives in the last few years to improve the condition of agricultural sector. These include the ambitious Pradhan Mantri Krishi Sinchai Yojana, Paramparagat Krishi Vikas Yojana, Soil Health Card, Pradhan Mantri Fasal Bima Yojana and National Agriculture Market scheme.
Moreover, keeping in mind the rising cost of production of major crops, the government also increased the MSPs for all mandated kharif, rabi and other commercial crops with a return of at least 50 per cent of cost of production for the agricultural year 2018-19.

During 2019-20 also, the government increased the MSPs of all mandated kharif and rabi crops in line with the principle of fixing the MSPs with a return of at least 50 per cent of the cost of production.
However, many farmers are not able to get the MSPs for their crops and are forced to sell their produces at lower prices due to lack of proper government mechanism. 

Deteriorating agri sector

According to RBI data the share of agricultural sector in NPAs has gone up in last three years, showing the deteriorating condition of the sector

Major schemes implemented by govt to ensure higher income for farmers

 Pradhan Mantri Krishi Sinchai Yojana (PMKSY)
 Pradhan Mantri Fasal Bima Yojana (PMFBY)
 Paramparagat Krishi Vikas Yojana (PKVY)
 Soil Health Card
 National Agriculture Market scheme (e-NAM)
 Neem Coated Urea
 Mission for Integrated Development of Horticulture (MIDH)
 National Mission for Sustainable Agriculture (NMSA)
 National Bamboo Mission
 Blue Revolution
 Rashtriya Gokul Mission.

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