Fresh data presented in the Rajya Sabha has thrown up a startling paradox in India’s agricultural credit system. Chandigarh, a Union Territory with minimal cultivable land, has emerged as the country’s leader in per-account agricultural loan burden — raising serious questions about the targeting and monitoring of farm credit.
Chandigarh: High Loans, Low Farming Footprint
According to the data tabled by the Minister of State for Finance, Pankaj Chaudhary, in a written reply on December 16, Chandigarh has around 8,000 agricultural loan accounts with outstanding loans amounting to Rs 3,068 crore. This translates into an extraordinary average loan of Rs 38.35 lakh per account, the highest in India.
Experts argue that this figure does not reflect farm distress. Instead, it points to a structural distortion in how agricultural loans are sanctioned in high-value urban and peri-urban areas.
Agricultural land in and around Chandigarh commands exceptionally high market prices, often running into several crores per acre. This allows landowners to pledge expensive land as collateral and secure large loans under the agricultural credit category, even when actual farming activity is negligible.
Concerns Over Diversion of Agricultural Credit
Economists and auditors have repeatedly flagged that concessional agricultural loans — which carry benefits such as low interest rates, interest subvention and periodic waivers — are sometimes diverted towards real estate transactions, business expansion or financial investments.
In regions like Chandigarh, the small number of loan accounts further exaggerates the per-account average, where a few large-ticket loans significantly skew the data.
Delhi Follows a Similar Pattern
Delhi ranks second nationally in per-account agricultural loans. The capital has 4.14 lakh agricultural loan accounts with outstanding loans of Rs 26,998 crore, averaging Rs 6.52 lakh per account.
As with Chandigarh, questions persist over how such large agricultural loans are being utilised in a predominantly urbanised region with limited farming activity.
Punjab: Rising Debt Signals Agrarian Stress
Among major farming states, Punjab’s numbers highlight deepening agrarian distress. The state has 25.23 lakh agricultural loan accounts with outstanding loans of Rs 97,471 crore, placing it fourth nationally. The average debt per farmer stands at Rs 3.86 lakh.
Advocate Kamal Aanand of Sangrur, who analysed the data, described the contrast as alarming.
“It is difficult to justify an average agricultural loan of over Rs 38 lakh in Chandigarh, where farming is almost absent. Similar concerns apply to Delhi. These figures suggest that agricultural loans are being diverted for non-farm purposes, warranting a detailed probe,” he said.
Haryana Shows Lower Average Debt Than Punjab
Neighbouring Haryana presents a comparatively better picture. The state has 36.63 lakh loan accounts with outstanding agricultural loans of Rs 1,00,013 crore, ranking seventh nationally. The average loan per account is Rs 2.73 lakh, which is Rs 1.13 lakh lower than Punjab.
Aanand pointed out that Punjab’s higher average debt reflects long-standing policy failures in ensuring sustainable farming practices and financial security for farmers, a situation increasingly linked to farmer suicides.
Eastern States Record Lowest Farm Loan Averages
At the opposite end of the spectrum, Meghalaya reports the lowest average agricultural loan in the country at Rs 76,966 per account, with 1.45 lakh accounts and total loans of Rs 1,116 crore.
Jharkhand, often categorised as economically backward, also records a low average of Rs 78,350 per account across 28.25 lakh accounts, with total loans of Rs 22,134 crore.
Experts say these figures highlight uneven access to institutional credit and stark regional imbalances in farm financing.
National Picture: Heavy Dependence on Credit
Across India, the agricultural sector remains heavily credit-dependent. The country has 17.42 crore agricultural loan accounts with outstanding loans of Rs 31.36 lakh crore, averaging Rs 1.80 lakh per account.
In terms of total loan volume, Tamil Nadu leads with Rs 4.94 lakh crore across 2.56 crore accounts, followed by Andhra Pradesh with Rs 3.76 lakh crore.
Call for Better Targeting and Monitoring
The emerging pattern — where urban regions top per-account loan averages while core agrarian states struggle with mounting debt — has intensified calls for better targeting, stricter monitoring and reform of agricultural credit policies.
Experts warn that unless loopholes are plugged, concessional farm credit may continue to bypass genuine cultivators, undermining the very purpose of India’s agricultural financing framework.