Financing the Farmers - The Microfinance Way

Agriculture in India is grappling with a myriad of issues, of which the most crucial being the absence of timely loans to undertake farming operations. Despite the erstwhile successive governments doubling credit to farmers and issuing Kisan Credit Cards, farmers have been facing cash-crunch causing them to fall back on the informal sector for funds. Policies like loan waiver and interest subvention often cause attitudinal problems amongst farmers towards timely repayment of loans. Also, the loan is seldom fully utilised for agricultural and other productive purposes resulting in less yields and thus leading to defaults. While on one hand, the recovery practices are not in sync with reality, the farmers’ attitude is also partly responsible. Drawing from the rich experiences of group-based activity to support marginal farmers in Karnataka, the paper underscores the fact that, bringing about a change in the farmers’ mindset by inculcating the habit of weekly repayment of loans is advisable so as to avoid defaulting on loan repayments.