Farm indebtedness a big worry for AP, TS

AP has highest share of indebted agricultural households in the country at 92.9% followed by Telangana at 89.1%

The latest data on agricultural households in India, released recently by the National Sample Survey Office (NSSO) of the Ministry of Statistics and Programme Implementation, raises some worrying questions for Andhra Pradesh and Telangana. The NSSO 70th round survey is the second time in the history of independent India sought to capture the situation with regard to agriculture households in India. Admittedly, comparison with the first such survey (59th Round in 2003) is tricky as definitions of “farm household” in the earlier round, and “agriculture household” in this round are different.

The survey says that, among major states, Andhra Pradesh has the highest share of indebted agricultural households in the country at 92.9 per cent followed by Telangana at 89.1 per cent. The report, Situation Assessment Survey of Agriculture Households in India is based on a countrywide survey of nearly 35,000 households for which data collected on the agricultural year spanning July 2012 to June 2013.

It reveals that nearly 57.8 per cent of India’s 90.2 million farm households are indebted either to banks or to money lenders. About 45 per cent belong to OBCs, while 13 per cent belong to Scheduled Tribes. UP has the highest number of indebted farm households at 60 lakhs. The number of indebted farm households in Telangana is 20 lakh, while the figure for Andhra Pradesh is 45 lakh. Over 50 per cent of the loans are meant for capital and other expenditure on the farm.

The numbers seem alarming. Andhra Pradesh and Telangana have the highest per capita debt with a very low share of the formal sector lending and with no microfinance. Such high indebtedness also points to public policy failure. To top it all, loan waivers have been an election issue. Many argue that such measures only lead to poor credit culture. To microfinance companies, the data has given a new weapon to argue that the indebtedness is a pointer to the increasing role of informal sources of debt.

Most of the statisticians feel that the data needs to be "unpeeled" and studied more closely. For instance, the average amount of outstanding loan per farm household in the category of farmers with land holdings of less than 0.01 hectares, or .0.02 acres, is Rs 2,40,900. It is difficult to believe that farming households with such low land holdings will be able to take on such high debt. But then, if the NSSO data is indeed correct, then, the policy makers in the states concerned need to be worried.

By G Rajendera Kumar