India: Tobacco Accounts for 40 p.c. of Crop Loans in Mysuru

Source from:  The Hindu 04/05/2016

The government's professed commitment to reducing tobacco cultivation by 80 per cent by 2020 has not been backed by policy initiatives, and this is best evident in public sector financial institutions sanctioning nearly 40 per cent of their agricultural loan outlay to tobacco crop alone.

Tobacco is largely cultivated in Mysuru district and parts of Hassan in Karnataka. The Flue-cured Virginia (FCV) variety has an international market.

There are nearly 75,000 to 80,000 tobacco cultivators — big and small — in the region and the crop is grown on 80,000 acres. Even during drought and farmers suicides due to loss of food crops last year, financial institutions had no issues lending to tobacco farmers.

"Agricultural loans come under the priority sector in the District Credit Plan and lending to tobacco farmers accounts for more than 40 per cent of the total crop loan in the district," according to District Lead Bank Manager K.N. Shivalingaiah.

It is a low-risk loan with repayment virtually assured due to MoU with the Tobacco Board and hence banks feel safe to lend crop loan to tobacco farmers, he added.

During 2015-16, the total advances made by various public sector banks, regional rural banks and cooperative banks to tobacco farmers in Mysuru district was nearly Rs.1,200 crore out of the Rs. 2,499.72 crore allocated for agriculture.

There is consistency in this lending since many years and loan to tobacco cultivators is almost 40 per cent of the total allocation for agricultural credit in a given year, said Mr. Shivalingaiah.

Anti-Tobacco Forum (ATV) convener Vasanthkumar Mysoremath said that there should be efforts to scale down agricultural credit to tobacco cultivators if India was serious about scaling down tobacco cultivation.

"The lending policies of the public sector financial institutions should also reflect the larger national policies of the Union government," he said.

Though the crop size has remained stagnant at around 105 million tonnes, what is intriguing is that no efforts have been made to bring down the scale of cultivation. One way to discourage its production was to reduce credit outgo, said Mr. Mysoremath.

India is one of the 150 countries which is a signatory to the Framework Convention on Tobacco Control as per which tobacco cultivation has to be scaled down by 2020.

"But if the loan size for tobacco crop is any indication then the government is not serious about it," said the ATF convener. Enditem