Loan benefits

To fill the gaps in the support package, Nabard plans a farmer distress index

The National Bank for Agriculture and Rural Development (Nabard) plans to formulate a Farmer Distress Index (FDI) to track, identify and support “needy and distressed farmers”.

Depending on the level of distress, the government and financial institutions can decide on an appropriate support program instead of the current practice of distributing a distress program to all farmers at all levels. “We are thinking about such an index. This will help the really needy and distressed farmers. This has not yet been settled,” said the president of Nabard.

said GR Chintala. This index will not be uniform across the country as it changes from place to place depending on stress levels. It will also help the entire financial sector, ministries and insurance companies. While a farmer’s distress is usually measured by the extent of damage to their crops, this leaves far too many distressed farmers in other areas beyond the reach of beneficiaries.

According to a study conducted jointly by Nabard and Bharat Krishak Samaj, an agricultural producer organization in Punjab, more than 60% of small and marginal farmers (SMF) in “very high” and “high” distress did not receive an agricultural loan waiver (FLW). The exclusion rate was also 60% for FMS in the medium distress category. In Maharashtra, SMFs who were better off because they were categorized as ‘low’ distress received the maximum FLW benefits. Almost 42% of FMS with a “very high” distress category did not receive PLF benefits. In UP, 47% of SMF in the “very great distress” category and 45% of SMF in the “great distress” category did not receive FLW allowances. In the three states combined, more than 40% of farmers in “extreme distress” did not receive any PLF benefits.


Data integration

The index can integrate available high-frequency data on key agricultural variables such as monsoon rainfall deviation, excess rainfall, dry spells and dry spells, soil temperature and moisture variations and the yield of major crops in the district, among others.

In Maharashtra and UP, sugarcane farmers who had taken out loans mostly had irrigated land and were assured of a fair price in the form of FRP (fair and remunerative price) and SAP (recommended price by the state). They all benefited from the agricultural loan exemption. The most struggling smallholders and marginal farmers with unirrigated land and growing low-value crops (especially those not purchased from the MSP) may not have taken agricultural loans. Thus, they did not benefit from FLW programs, according to the study.

Nabard’s study indicates that this index can integrate available high-frequency data on key agricultural variables such as monsoon rainfall deviation, excessive rainfall, drought and dry spells, temperature and humidity variations. soil moisture, among others. “This index can be used by policy makers and government to plan and design a timely and targeted method of supporting farmers in distress,” Nabard Deputy Director Shaji KN said.