Drowning in Debt

Bitter Harvest 3

DIONNE BUNSHA
in Amravati

Sheikh Bhura Sheikh Ramzan has set up his home under a tree this monsoon. He sold his house to pay his debts. “When it rains heavily, we sleep in the village school,” says Sheikh, a resident of Dhanora Fasi village in Amravati.

Even after selling the roof over his head and a third of his three-acre plot, Sheikh still has an outstanding debt of Rs 10,000 with the local moneylender.

Lakhs of cotton cultivators in the Vidarbha region have been crippled by enormous debts after their crops failed due to unseasonal rain, hail storms and pest attacks.
Sheikh doesn’t know how he will make it through this kharif (monsoon) season. “The banks will throw me out. The moneylenders will not lend me any more money. It’s difficult to get work in the fields because people can’t afford to hire labourers. In any case, no one wants to hire an old man,” he says.

While Sheikh has endured the adversity, others have not. More than 80 suicides have been reported in the state so far, 60 from the Vidarbha region. Hounded by the moneylenders and tormented with anxiety about how to find the funds to prepare their fields for this season, they felt there was no other way out.

Manjurabai Thakur found her husband Hari (60) lying dead in the fields two days after he drank pesticide. “For days, he wouldn’t eat or talk. We don’t even know how much money he borrowed. After his death, moneylenders came here asking for Rs 10,000,” says Manjurabai from Januna village in Nandgaon taluka of Amravati.
Manjurabai was forced to lease out her tiny plot. “I try to find work in the fields to run the house,” she says. “When the school term begins, I will request the schoolmaster to give my grandchildren note books. There is not enough food in the house and we wait for the khichdi that the younger one brings back from his balwadi.”


Repaying debts to moneylenders at interest rates of 60 to 120 per cent has pushed several families like Manjura’s to the brink. At the root of the problem is the weak rural banking system here, which caters only to a small section. Bank credit accounts for a mere Rs 256 crore of Vidarbha’s total credit requirement of Rs 2,456 crore, according to Kishor Tiwari, a local BJP activist.

Banks seems unlikely to increase their credit in the near future since they have recovered only 5 to 13 per cent of crop loans, due to last year’s climatic crisis. The few large farmers who do receive credit say that the amount of money given per hectare does not meet all expenses. It is less than half the amount recommended by the agriculture department and the National Bank for Agriculture and Development (NABARD).

NABARD’s executive director S.B. Sharma admits that nationally, banks cover a mere 20 per cent of the cost of agricultural production. He explains, “Since agriculture is considered an unstable business heavily dependent on the monsoon, commercial banks are reluctant to lend. Moreover, with liberalization, they are cutting costs by restricting the number of small borrowers in order to compete with foreign banks.”

Funds in co-operative banks are corners by the politically powerful. “Politicians are on the bank’s board of directors and have total control over the funds. We can see that the money is not reach the most needy farmers,” admits a senior district co-operative bank official.

Pointing out the “bias against agricultural finance”, Mr Sharma explains that both agriculture and industry contribute an equal 26 per cent to the GDP. Yet, agriculture receives only 12 per cent of gross bank credit while industry gets 54 per cent.

Although an “unstable business”, there is not comprehensive crop insurance scheme to reduce the risks in agriculture. “Of the few who are insured, a small handful have been able to claim compensation for crop damage,” says a district cooperative bank official. Only 11.24 lakh of the 94.69 lakh cultivators in the state are covered by the insurance scheme.

Profitability of farm produce is also shrinking, making the farmer’s tightrope walk for survival even more precarious. “Every year, fertilizer and seed costs increase by 10 to 15 per cent. Produce prices have not increased proportionately. While we produce the crop, traders cartels control prices. Why doesn’t the government stop this exploitation and regulate the market?” asks Pramod Lade, a farmer and Panchayat Samiti member from Wardha.

“Early this year, the market price of tomatoes was fixed at 50 paise per kg and brinjals at Re 1. Normally, these vegetables are sold at Rs 15 to Rs 20. Since it would cost us more to transport our vegetables to the market, we decided to let them rot,” says Suryapal Chavan from Amravati.

4 July 2006, The Times of India, Mumbai