The area under pumpset irrigation has grown rapidly since the last monsoon, but not exactly in the way that the mandarins at the agriculture and finance ministries had planned it.
Thanks to dumping of Chinese pump engines and sets, acreage under irrigation has grown. However, the low cost of Chinese equipment has also ensured that the scheme launched by the National Bank for Rural & Agricultural Development called the 'On Farm Water Management Subsidy Scheme' for providing pumpsets at a subsidy has flopped miserably.
Chinese pumpsets have in fact captured as much as 30 per cent of the pumpset market which was around 25,000, including both 5HP and 3HP sets, in West Bengal alone. The eastern region market was about five times more.
As many as 8,000 Chinese pumpsets were sold in the last one year in West Bengal and the share would be the same in other states in the region. Most were from a company named Tricycle.
The pumpsets were mostly used to draw water for cash crops to raise the second or third crop. Their use was the highest in the pre and post monsoon months.
The real losers in the development has been Indian pump engine makers and pumpset manufacturers. Cheaper versions of imported Chinese pumpsets have completely distorted the water pump market in the country, industry sources told Business Standard.
Farmers have been opting out of the subsidy scheme, which offers 30 per cent subsidy along with bank finance at a nominal rate for Indian pumpsets. But Indian products are so much more expensive that the some farmers were buying Chinese machines by paying the full price in cash.
For example, landed cost of Chinese water pumpsets of 3-5 horse power was about Rs 7,000. Under the Nabard scheme, only pumpsets certified by the Bureau of Indian Standards could be financed.
The cheapest BIS-certified set cost around Rs 17,000, or Rs 10,000 more than the Chinese option. As a result, farmers were shunning Indian BIS pumpsets and buying Chinese ones.
Nabard had allocated around Rs 40 crore (Rs 400 million) under the scheme for 11 districts of West Bengal alone. It had released Rs 20 crore (Rs 200 million) to banks from which farmers were expected to take finance.
Banks had managed to disburse only Rs 5 crore (Rs 50 million) in the last one year.
"Nabard was forced to extend the tenure of the scheme," said an official from Nabard when asked on the status of the scheme. "Farmers are not opting for the scheme, they are instead ready to make cash payment in full for acquiring a pumpset that sells at Rs 7,000," the official said.
"Given the poor offtake of loans under the scheme which resulted in only 1,726 (Indian) sets being sold, we increased by the tenure by another year to March 2004," the official added.
Under Nabard's scheme, a farmer had to pay 20 per cent of the cost of a pumpset worth Rs 17,000, or Rs 3,400. The balance came from the bank. The subsidy component of 30 per cent was back ended one, being adjusted towards the end of the loan period.
"Farmers are preferring to shell out Rs 7,000 at one time and stay away from the botheration of paying monthly interests," the Nabard official confessed.
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