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.

In this backdrop, NCEUS has recommended a special package for small and marginal farmers in form of FDRC. For formation of debt-relief commissions, it has asked central government to provide guidelines and assistance to specific states. Further, central government could extend relief package to state commissions on 75:25 basis. These state commissions would examine and institute measures to ensure institutional credit to small and marginal farmers.

The panel has also recommended a special programme that will include preparation of a blueprint for the development of marginal and small farmers. This plan will assess the numbers of such farmers, document the problems faced by them and suggest locally relevant development strategies, sensitive to the growing feminisation of the workforce and set quantitative targets. Emphasis will be on convergence of the small and marginal farmers’ requirements with all existing programmes.

The wretched of the earth

29.5 per cent Marginal farmers out of total number of farmers in India

15.8 per cent Small farmers out of total number of farmers

50 per cent Contribution of small and marginal farmers to total value of national crop output

Land holding

Year Small, marginal farmers

1960-61 61 per cent

2002-03 80 per cent

What is their curse?

• Imperfect markets for inputs/products leading to smaller value realisations

• Absence of access to credit markets

• Poor human resource base

• Poorer access to public goods such as public irrigation and electricity grids

• Increasing globalisation adding international dimension to their problems

What to do?

• Set up Farmers’ Debt Relief Commission in states with agrarian distress

• Ensure credit for small and marginal farmers; set priority lending of 10 per cent

• Let RBI monitor credit flow to small and marginal farmers separately

• Link them to banks through special programmes