Opinion - Editorials

Easing norms for crop loans

THE FIRST TEN days of August witnessed a higher level of average precipitation than July. But even in central and south India, which is where the monsoon has been more vigorous this month, it may well be a case of too little happening too late. The best that can now probably be hoped for before the monsoon begins to withdraw in early September is that the rains recharge surface and groundwater resources so that at least the drinking water problems are minimised and there is enough moisture for the rabi crop. The extent of the shortfall in the 2002 monsoon will be established after August 15, when the Indian Meteorological Department is expected to make its assessment of rainfall patterns in each of the 36 meteorological zones in the country. But enough is already known to have persuaded the Union Agriculture Minister, Ajit Singh, to shift the time line for the degree of severity in 2002 from the worst drought in the past decade to the biggest monsoon failure since 1987. Mr. Ajit Singh now predicts that many more than the 12 States first identified could well have to be declared as drought-affected.

In the latest of a series of decisions that have been taken to deal with the fallout of the drought, the Government, working through the Reserve Bank of India and the National Bank for Agricultural and Rural Development, has relaxed certain credit norms. No decision has been taken to waive crop loans or interest due in the affected areas. The case for any ad hoc waiver has not been established; in any case it is too early for such a decision. What has been decided is, first of all, to relax credit limits so that in areas where the monsoon has revived farmers will be able to draw on fresh crop loans so that they can begin a new and shorter crop cycle to replace what was destroyed by the long dry spell in July. In addition, the RBI has been asked to instruct banks to convert short-term loans that are coming up for payment this year to long-term credit and interest dues will not be compounded when rescheduled. Cooperatives and regional rural banks will also be advancing loans for installation of new tube and bore wells and deepening of existing wells. Many of these emergency measures have to be carried out during a drought. But there is always the danger that in rushing to cope with a crisis, ad hoc decisions, which will not have a measurable impact on the ground, will be taken. As it is, while many of the affected States have already compiled a long list of financial demands, only a few of them have formally identified particular districts and taluks as affected by the drought. To be fair to the State Governments, this cannot be decided with any degree of certainty until the fickle monsoon of 2002 has run its course.

The Centre has already released Rs. 1,200 crores in two instalments from the Calamity Relief Fund. This is a small amount when compared to the States' demands which now add up to more than Rs. 13,000 crores. The task force of Union Ministers that is dealing with the drought will presumably take a decision on how to meet these requests after a final verdict is delivered on the deficiency of the monsoon. But inflated as some of the States' estimates of their financial requirements may be, there will be no escaping from having to come up with substantial additional funds. The IMD's assessment was that at the end of July the average rainfall delivered by the monsoon was as much as 30 per cent below the normal and more than 75 per cent of the country's districts were facing the possibility of a severe drought. This situation is unlikely to change very much in August.

© Copyright 2000 - 2009 The Hindu