Coming down heavily on the UPA government for its failure to address inequalities faced by small and marginal farmers by its policies and programmes, a government panel has recommended formation of an institutional mechanism — Farmers’ Debt Relief Commission (FDRC) — in states facing agrarian distress.

According to a report ‘Proposal for a Special Programme for Marginal and Small Farmers’, prepared by Arjun Sengupta-led National Commission on Enterprises in Unorganised Sector (NCEUS), a large majority of small and marginal farmers is out of the ambit of government’s loan-waiver scheme, announced in the Union Budget 2008-09.

Of small and marginal farmers, with per capita land holding of less than two hectares, only 13.6 to 21.8 per cent have access to formal credit. Since a majority of them lie outside the institutional credit framework, they cannot lay claim to the UPA government’s populist farm loan-waiver scheme.

The commission has recommended that priority sector lending guidelines should be revised and a target of 10 per cent needs to be fixed for this segment. RBI, it says, should separately monitor the credit-low progress. Even government’s minimum support price has not been successful as its coverage in terms of crops and area is small, says the report. The report will be presented to the Prime Minister Manmohan Singh after it receives advisory board approval on Monday.

The report points out that average outstanding loan per farmer household was Rs 12,585 in 2002-03, amounting to a total outstanding loan of approximately Rs 943 billion for small and marginal households alone. The number of such farmers has steadily increased with little difference in their lot. Their contribution to total value of crop output exceeds 50 per cent nationally. Given the low agricultural growth during 1997-98 and 2003-04, impact of this crisis was acutely felt by small and marginal farmers.

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