In a recent survey carried out by the National Sample Survey Organisation, 31 per cent of rural households were found to be in debt. Average debt rose to Rs 32,522 in 2012 from Rs 7,539 in 2002. Subsequently in another NSSO survey, it was stated that about 52 per cent of agricultural households were in debt. The latter report also claimed that 40 per cent rural households take loans from non-institutional sources like money lenders. These figures are strong indicators of an agrarian credit crisis, despite all the massive loan waivers that were passed on by authorities at the State and Central level. Matter were made worse this time around by poor monsoon showers, since most farmers are dependent upon monsoon showers, resulting in lower yields. The primary function of India’s agricultural loan system is intended towards helping poor farmers get cash to buy fertilizers and seeds. However, as Union Finance Minister Arun Jaitely pointed out in his first Budget speech, that a ‘large number’ of poor tenant farmers are unable to obtain bank loans, as they can’t provide a land title as guarantee. Instead, these loans benefit big farmers, traders and moneylenders, who are usually the largest landowners in the area. With nowhere to go for easy credit facilities, millions of tenant farmers look towards local moneylenders for loans that are issued at interest rates of up to 30 per cent, which is five to six times more expensive than a bank loan. Consequently, the vicious circle of debt trap perpetuates itself. Loan waivers are merely a stop gap measure and according to RBI governor Raghuram Rajan, ‘does more damage to the credit structure’. What we need is a more responsive gradient, while giving credit or loan waivers to farmers depending on his economic bracket. This requirement must translate into a complete overhaul in the rural banking structure. The Jan Dhan Yojana, with its emphasis on direct cash benefit transfers, is just one step in the right direction.