BENGALURU: With rainfall continuing to remain scanty across the state three months after the onset of the southwest monsoon, farmers in Karnataka are desperate. They say if it does not rain — and rain well — over the next few days, they could lose their entire crop and push them into debt.
Officials in the cooperation department say many farmers are likely to default on crop loans and bankers expect more than 50% of loan accounts to turn into non-performing assets (NPAs).
Despite the pandemic, banks had enjoyed a good run over the previous three consecutive years as copious rain kept the agriculture sector in the green and farmers were prompt in repaying loans. State Level Bankers Committee (SLBC) officials say the rate of recovery was around 90% till the end of 2022-23.
But this year, they say the situation will be different and signs of distress are already showing up. In the current kharif season, some 75% of the sowing target of 82.3 lakh hectares was achieved until the beginning of August, but crops are now withering in the heat.
Until the end of the last financial year (March 31, 2023), banks disbursed Rs 1.6 lakh crore in farm loans as against a target of Rs 1.4 lakh crore for 2022-23. NPAs amounted to about 9.6%. Of the 48.6 lakh farmers who took loans (including short-term crop loans) only 8.9 lakh farmers defaulted.
But this financial year (from April 1, 2023), nearly 48.6 lakh farmers had availed loans totalling Rs 1.9 lakh crore and payments outstanding have already mounted to Rs 18,964 crore (9.7%) at the end of June. Based on initial data from various banks, SLBC officials fear at least 50% of loan accounts to become NPAs, although they admit the actual picture will only emerge at the end of the year.
“The situation appears bad as about 60% of loan accounts are pending renewal and farmers are not coming forward to close them,” said a senior SLBC official.
T Yashawantha, general secretary, Karnataka Prantha Raitha Sangha, said by being patchy, the monsoon has deceived farmers. “Farmers would not have sown had the dry spell continued in July as well. Now, the government must come to their aid,” Yashawantha said.
Yashawantha recently led a del egation of farmer organisations that met chief minister Siddaramaiah to urge him to announce a farm loan waiver scheme and a one-time settlement scheme for defaulters.
“We appealed to the CM to waive 50% of the principal component and asked for a one-time settlement scheme for the rest. The CM will take a call after consulting banks,” said Prakash Kammaradi, former chairman, Karnataka Agriculture Price Commission.
The SLBC is scheduled to meet in October, but the government is likely to convene a meeting much earlier, perhaps in September, to take stock of the situation. “We are taking all possible steps to declare drought so that farmers can get input subsidy [compensation] for crop loss,” said agriculture minister N Chaluvarayaswamy.
