Debt-burden of farmers increases to five-folds in Punjab

Vikram singh · #1 (**permalink**) 04-Jan-2010, 23:13 PM

CHANDIGARH: Punjab, considered as the food bowl of the country has witnessed a five-time increase in the debt-burden of farmers in the last decade. Farm debt has grown to approximately Rs 30,394.12 crore in 2008 from Rs 5,700.91 crore in 1997.
A recent study conducted by a well-known economist and director (research), Punjab Development Studies at the Institute for Development & Communication (IDC), Chandigarh, HS Shergill reveals that over these 10 years (1997-2008), farm debt has increased at a faster rate than farm incomes.
The report has also revealed that commission agents and money lenders are the largest players in the farm credit market of the state, followed by commercial banks. The report has thrown light on the collapsing cooperative credit system of the state.
The debt amount has increased to 84% in 2008 from 68% in 1997, of the net farm income generated by the sector. As a proportion of the value of machinery owned by Punjab farmers, the debt amount has gone up from 15% in 1997 to 53% in 2008.
In spite of the steep rise in farm land prices in the state, the amount of farm debt is now equal to 4% of the total value of farm land of the state, compared to 3% in 1997.
On the same lines, the annual interest burden of farm debt has gone up from being 11% (1997) to 14% (2008), of net farm income of the state.
Shergill said that around 72% of farm households are more heavily involved in debt and 17% farm households are in virtual ‘debt trap’. This implies that they cannot pay even the annual interest charge on their loans from their current farm income.
Reference:: Sikh Philosophy Network http://www.sikhphilosophy.net/sikh-news/28773-debt-burden-farmers-increases-five-folds.html
He added that almost two-fifth (60%) of these ‘debt trapped’ farm households are marginal and small farmers. Among different regions of the state, the highest (Rs 48,154) per operated acre amount of debt was observed in the northern Malwa region, and the lowest (Rs 16,095) in the foothills region.
Reference:: Sikh Philosophy Network http://www.sikhphilosophy.net/showthread.php?t=28773
In the total debt owed by Punjab farmers, the share of commission agents and money lenders is estimated at 43.46% (Rs 13,179.09 crore), of commercial banks 31.78% (Rs 9,659.81 crore), and of cooperative credit institutions 18.91% (Rs 5,748.45 crore).

Narayanjot Kaur · #2 (**permalink**) 05-Jan-2010, 00:07 AM

Please keep up posted. This is very heart rending information.