Incidentally, Andhra Pradesh has never been short of largesse. During Chandrababu Naidu’s tenure, he ensured that relief from New Delhi was not wanting. The only problem was that much of it didn’t reach the farmer. Rajasekhara Reddy also has a friendly government at the Centre. Prime minister Manmohan Singh’s first visit after assuming office was to AP, where he announced the release of 1.82 lakh tonnes of rice and Rs 60 crore in cash. The state government has asked for Rs 3,190 crore central assistance. Plus, it wants Rs 45,000 crore debt financing for 23 irrigation projects.
At the core of the problem are tenant and marginal farmers. This group has proved doubly vulnerable, as they have to pay exorbitant rents for leasing the land they cultivate. Then, having no fixed assets, they are not eligible for any loans from institutional lenders and are on the mercy of local sharks. In fact, institutional lenders such as nationalised and rural cooperative banks only account for between 20 to 30 per cent of rural credit today. The bulk of the monies are lent out by local moneylenders who charge an exorbitant 24 to 60 per cent interest on borrowings. The new government has promised to force banks to make an additional Rs 11,000 crore available as rural credit. It also plans to introduce a scheme so that marginal farmers can qualify for these loans.