BANKING TRADE AND COMMERCE

STATE AID TO AGRICULTURE

The system of granting tagai loans to the needy agriculturists and tanners is not new. Even before the British rule, it was being operated, although on a small scale, to help agriculturists tide over years of famine or drought. Later the system was applied almost invariably even during normal years. Under the British administration, a number of Acts were passed between 1871 and 1879. Substantial financial assistance, however, was granted only alter the Land Improvement Loans Act of, 1883 and the Agriculturists' Loans Act of 1884 came into force. The former Act is broadly concerned with long-term loans, while the latter deals with short-term financial accommodation.

The following paragraph gives an account of the loans given by Government to needy farmers at the time the old Gazetteer of Bhandara district was published.

Government Loans: "The system of Government advances for land improvement loans has been largely expanded in recent years, as an excellent method of providing work in seasons of distress. From 1874 to 1896 only about Rs. 60,000 were advanced in all under the two Acts of 1871 and 1883. Since that year nearly Rs. 3 lakhs have been advanced, principally in the famines of 1897 and 1900 and the scarcity of 1903. In 1897 special famine loans were granted without interest, the amount so given out being more than two lakhs. In 1899-1900 the advances were very much smaller, as the village proprietors were not in a position to take loans. But a number of small tank works were undertaken by Government both directly and by means of grants to mal-guzars. In 1903 the 'grant-in-aid ' scheme devised by Mr. Crad-dock as Commissioner of Nagpur was introduced. By this tanks were constructed under Government supervision in malguzari villages, a half of the cost being borne by Government and a half by the malguzar or the malguzar and tenants jointly. A number of tanks were begun on these lines, and have been or are gradually being completed in subsequent years. In 1902-03, a sum of Rs. 41,000 was distributed under the system in 28 villages. Out of a total sum of Rs. 3.45 lakhs advanced in loans from 1873 to 1905, Rs. 1.64 lakhs have been recovered and Rs. 16,000 remitted, while Rs. 18,000 have been received on account of interest. Rs. 1.65 lakhs are outstanding. As these totals include famine loans advanced under the special condition of part remission of the principal, the results may be considered sufficiently favourable Up to 1904-05, a total of 155 sanads or certificates were granted for works of improvement. Of these, 71 were given for the improvement and two for the construction of tanks. In the other cases they were given for the improvement of fields or for sinking wells. Under the Agriculturists' Loans Act, transactions were similarly on a small scale up to 1895-96, but have reached very Large dimensions in recent years. In 1897 about Rs. 70,000 were given out, in 1900 more than three lakhs, and three lakhs again in 1902-03. Altogether Rs. 9.8 lakhs were advanced from 1884 to 1905, of which Rs. 61 lakhs have been recovered and Rs. 2 lakhs remitted. Rs. 20,000 have been received on account of interest. In 1902-03 advances were made to the village as a unit, on the joint and several responsibility of all its recipients. This lessened the time and labour involved in distribution and gave a direct incentive to the villagers to prevent loans being granted in undeserving cases; should an untrustworthy applicant come forward the other cultivators would protest [Central Provinces District Gazetteers, Bhandara District, Vol. A, 1908 pp.]."

Land Improvement Loans Act, 1883: Loans under this Act are granted to cultivators for works of improvement in land, such as, construction of wells and tanks, preparation of land for irrigation, drainage, reclamation of land from rivers or other waters and protection of it from floods or erosion. The Collectors, Prant officers and Tahsildars are authorised under this Act to grant loans each to a specific extent and charge on all loans an interest at the rate of 8.50 per cent per annum. Government, however, may charge in particular case, a reduced rate or charge no interest at all. The loan is given when the grantor is satisfied as to the security with a margin of safety. When the value of the applicant's interest in the land to be improved clearly covers the amount of the loan with interest and the cost (if any) likely to be incurred in making the same, collateral security is not required at all. Generally immovable property is demanded as security against loan if the amount advanced is large. Personal security may be accepted, even that of one person, provided that his solvency is certain.

Agriculturists Loans Act, 1884: Under this Act Loans may be granted to the holders of arable lands for: (i) purchase of seed, fodder, cattle, agricultural stock, agricultural implements, hire of agricultural implements or cattle, etc., (ii) rebuilding houses destroyed by fire, flood or any other calamity, (iii) maintenance of cultivators while engaged in sowing or tilling their lands prior to the next crop, (iv) any other purpose not specified in the Land Improvement Loans Act of 1883, connected with agricultural objects. Collectors, Prant Officers and Tahsildars are authorised to grant loans up to specified limits. Loans above Rs. 2,500 have to be referred to Government for approval. Interest of 8½ per cent per annum is charged on all loans, but the Government on the recommendation of the Collector may in particular cases authorise to reduce rate or charge no interest at all. Terms as regards security are the same as under the Land Improvement Loans Act of 1883.

Tagai loans for purchase of seed, fertilizers and weeding operations and for grow more food under the Agriculturists' Loans Act are advanced against collateral security, jointly or severally whereas individual loans under the Land Improvement Loans Act are granted on hypothecation of immovable of the borrowers. The loans are granted even to a person furnishing a collateral security. When individual security falls short while granting loans, the repaying capacity of the borrower is taken into consideration. Generally 75 per cent of the loans are advanced against security of land and 25 per cent are advanced against collateral security. The ratio of the value of security to the total amount of loans advanced is 2:1.

The following tables give the details of the tagai loans granted to the agriculturists in the Bhandara district during 1966-67, 1967-68 and 1969.

They indicate in the first instance, the total number of applications received and sanctioned and the amount of loans asked for, sanctioned and actually distributed (table No. 19); secondly, purpose for which the financial assistance is given (table No. 20); thirdly, the time-lag between the date of application and the date of sanction (table No. 21); fourthly, the time-lag between date of sanction and the date of disbursement of these loans (table No. 22); fifthly, the duration of loans (table No. 23); and lastly, the reasons for the rejection of loans in a number of cases (table No. 24).

TABLE No. 19

FINANCIAL ASSISTANCE TO AGRICULTURE IN BHANDARA DISTRICT DURING 1966-67, 1967-68 AND 1968-69.

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