Date:18/01/2004 URL: http://www.thehindu.com/2004/01/18/stories/2004011802240400.htm

Andhra Pradesh

Finance panel suggests steps to better farmers' lot

By Our Special Correspondent

HYDERABAD, JAN. 17. The Standing Committee on Finance on the Credit Flow to Agriculture in its report to the Lok Sabha recently suggested establishment of an apex bank - National Rural Bank of India - and constitution of a National Agriculture Crop Relief Fund for aiding farmers affected by consecutive crop failures. It also sought a halt to indirect lending by banks at the cost of direct lending.

Citing several anomalies in the practices of the banking industry which were depriving the farmer of rightful share, the report seeks an immediate halt to the `commercialism' being practised by the banks.

The report released by the chairman of the Committee, N.Janardhan Reddy, to the press here on Saturday states that improper utilisation of Rural Infrastructure Development Fund must be stopped henceforth. There should be a complete ban on interest on RIDF deposits, it says, suggesting involvement of farmers' fora in selection of projects by States, particularly relating to agricultural activities and irrigation projects.

The report asks the banks to complete all formalities and issue Kisan Credit Cards to farmers within 15 days and also launch a campaign to generate more awareness among farmers in this regard. Referring to gold loans, it says facility of nomination should be provided by making an amendment to the BR Act, 1949.

The rate of interest of cooperative banks should be lowered to bring it on a par with other commercial banks.

The interest rate in regional rural banks must also be reduced, it adds seeking lower stamp duties and minimum documentation process. An endeavour must be made to reduce the interest rate on agricultural advances below 9 per cent presently available on loans up to Rs.50,000. Recognition to oral tenants and formation of groups by such tenants are essential to protect the small and marginal farmers and share croppers, it adds.

The report categorically recommends that excessive security which is being demanded by the banks for issuing loans must come down in relation to the amount of loan raised and also that the land value be fixed at the market value. Coverage of farmers and all crops under the insurance scheme, recognition of gram panchayat as unit of insurance, reduction in premium rates charged for horticulture and commercial crops and restoration of premium subsidy and sharing of subsidy and claims between the Centre and the State in the ratio of 2:1 are some other changes suggested.

Mr.Janardhan Reddy, who is also a former Chief Minister of Andhra Pradesh, said the committee had travelled across 17 States and union territories and studied the work of public sector banks and identified the main areas of concern.