Income inequality is increasing every day. Few corporate industrial house owners are becoming oligarchs. The olden day monarchs at least had some concern for the people. These monarchs don’t care. The income inequality reduced between 1970 and 1990. That was because of nationalisation of banks on 19th July 1969 which led to dramatic increase in small credit. In 1972, 90.4% of the borrowers were small borrowers with loan upto Rs.10000. Another 7.32% of the borrowers had availed loan upto Rs.1 lakh. Together 97.7% of the borrower accounts were small accounts. But 20.5% of total loans went to them. Only 1352 borrowers had loans above Rs. 1 Crore. There were total 4340205 borrowers.
In 1991, 94.9% of the borrowers had availed loans upto Rs.25000. Borrowers with loans upto 1 lakh was 3.4%. Together 98.3% of the borrowers were small borrowers. They received 30.2% as total loan amount. Only 13546 borrowers had loan above Rs. 1 Crore. Total borrowers increased to 61946755.
But as on March 2020, borrowers with loans upto Rs.25000 is 17.3%. Taking into account inflation loans upto Rs. 2 lakhs (instead of 1 lakh) is 59.6%. Together the small loans Account 77.9% only. The amount of loan is only 8.7% of total credit. What is worse is borrowers with loans above Rs.1 crore is 265909 who have availed 56.1% of the total credit and of this 13105 borrowers have availed loans above Rs.100 Crores and 30.9% of total credit. Total borrowers is 272520183.
So access to credit for majority of the population in the country is not available. Out of 96 Crore population eligible to avail loans only 27 crores could avail credit which is only 28% of the eligible. But a minuscule minority could avail major credit.
Now the problem with the Farm Acts is that it hands over agriculture and agri business to the corporates.
The banks always prefer loans with tie up like the loans given for sugarcane farmers, mango farmers etc who have tie up with companies and factories. So with contract farming, Adani’s and Ambani’s who have availed huge credit from banks will make the farmers to have contract with them. Banks will encourage it so that they can ensure recovery. Since these corporates, always prefer cash crops where the value will be high and export opportunity will be better, farming will shift to cash crops, horticulture, floriculture etc. So production of rice, wheat and pulses will go down. When output is less the prices will go up. Everyone in the country will have to pay more. The corporates will import these items and sell to us at high prices.
The small traders whose number is huge, will have to become agents of the corporates or disappear. They will also get loans only if they have tie up with corporates. After all banks have given more than Rs. 2 lakh crore loans to Adani and another Rs.2.5 lakh crores to Ambani. This includes Indian and foreign banks. To recover these loans they will force every borrower for tie up with these corporates who are blue eyed boys of the government.
Agriculture loan will be given only with tie up. Education loan will be given if students study in institutions with corporate tie up. Consumer loans will be given for buying products of corporates. There are 42.50 million SMEs who have received only 16% of bank credit will also find it difficult to get bank loans without corporate tie up.
The CEO of Niti Ayog (Aniti Ayog) has stated that 5-6 conglomerates are enough and MSMEs can work under them.
The states which are giving free rice and wheat will not be able to afford the price and stop public distribution system. They will credit small amounts to your accounts as direct benefit transfer if IMF and World Bank permit because most of the states have availed their loan.
It may take one or two years but by that time we will be left to the mercy of the corporates.
We can’t live without food. So we will have to buy at heavy prices, hunger will increase, malnutrition which is a very bad problem will increase too.
Financial Stability and Deposit Regulation Act will come in. Our money will not be safe with banks. It will not be safe anywhere.
The corporates will flourish. They won’t mind if some people die of starvation. The income inequality will further increase.
Everybody in the country has to realise this. This is not a dooms day prediction. This will be the reality if the policy of supporting the corporate oligarchs is allowed. The farmers have understood. That’s why they are on agitation all over the country.
What are we going to do? Stand up with farmers or mortgage the future of our children to corporates?
Thomas Franco is former General Secretary of All India Bank Officers’ Confederation.