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27 states, 12 states have more than 24 per cent of formal sector loans from
cooperatives. Cooperatives dominate in two states: Gujarat (60.1 per cent),
Maharashtra (57.9 per cent); Tamil Nadu (43.6 per cent). Punjab (36.7 per
cent), Kerala (34.4 per cent) and Haryana (35.4 per cent) and West Bengal
(33.1 per cent) come close to them. The second revelation is that cooperatives
generally serve the sub-marginal (0.01 hectare) and marginal farmers (0.01 to
0.40 hectare) better than commercial banks. In Maharashtra, 71.5 to 64.3 per
cent of the debt are from cooperatives and in Gujarat from 23.1 per cent to
67.1 per cent in respect of sub-marginal and marginal farmers. In other states,
the situation is not uniformly so. Overall, there is unmistakable evidence that
commercial banks serve large-size farmers better.
The Incidence of Interest Burden
About 82 per cent of the rural debt against institutional agencies as of
June 2002 were in the interest range of 12 to 20 per cent while prime lending
rates (PLRs) of banks were in the range of 11 to 12 per cent. The onerous
nature of debt from non-institutional agencies is brought out by the fact that 73
per cent of their debt has been at rates of interest above 20 per cent (Table 9).
Table 9: Percentage Distribution of Amount of Cash Debt Outstanding by
Rate of Interest Separately for Institutional and Non-institutional
Agency as on June 30, 2002
All-India
Rate of
Interest
Class (%)
Rural
Urban
Institutional
Non-
Institutional
All
Agencies
Institutional
Non-
Institutional
All
Agencies
nil
1
18
8
3
33
10
less than 6
2
2
2
4
1
3
6-10
4
1
3
12
1
9
10-12
9
1
5
25
1
19
12-15
48
1
28
32
4
25
15-20
34
3
21
22
9
19
20-25
1
33
15
1
18
5
25-30
0
0
0
0
1
0
30 & Above
0
40
17
1
32
8
Total
100
100
100
100
100
100
Source:
NSSO:
Household Indebtedness in India
, All India Debt and Investment Survey, (January-
December 2003), NSS 59
th
Round, Report No. 501
Looking at it in a more aggregated way, the cultivator households have
borne 15 to 20 per cent rates of interest on 35 per cent of their outstanding
debt and 12 to 15 per cent on 50 per cent of such debt, together 12 to 20 per
cent for 85 per cent of debt. On the other hand, 36 per cent of cultivators’ debt
with non-institutional agencies were at the interest range of 20 to 25 per cent
and another 38 per cent of debt at 30 per cent and above (Table 10).
