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DEVELOPMENT-INDIA: Cotton Farmers in Distress – Relief Given Elsewhere

Jaideep Hardikar*

PUNE, Maharashtra, Mar 21 2008 (IPS) - On Mar. 4, barely four days after Indian Finance Minister P. Chidambaram announced a mammoth loan waiver for farmers, 55-year-old Dattu Chaudhary, who owned 3 hectares (ha) of land committed suicide in Nara village in Maharashtra state.

Jyoti holds up the picture of her husband Santosh Deshmukh, one of three indebted Deshmukh men who committed suicide  Credit: Jaideep Hardikar/IPS

Jyoti holds up the picture of her husband Santosh Deshmukh, one of three indebted Deshmukh men who committed suicide Credit: Jaideep Hardikar/IPS

Two other farmers also ended their lives on the same day. All three were dry-land cotton farmers in Vidarbha, a region synonymous with farmers’ suicides in India. Poor cotton growers have been driven to death by debt.

Chaudhury gave up hope when he saw that he was above the finance minister’s cut-off mark of 2 ha (1 ha=approx 2.46 acres) for the bank loan waiver.

With 3 ha, he could only have got a 25 percent rebate on the loan, says his nephew Gajanan Chaudhury. Nara is 45-kms west of Wardha in western Vidarbha.

"My uncle owed 75,000 rupees (1,800 US dollars) to the State Bank of India. He was already bankrupt, he could not have repaid 75 percent all at once to avail of the rebate benefit," Gajanan told IPS.

The two other farmers who killed themselves by consuming pesticide were, as reports indicate, out of the institutional credit structure. Their loans were from private moneylenders. Chidambaram’s waiver gift is only for borrowings from public banks.

The finance minister said in Parliament that he expects 30 million farmers to benefit. Small and marginal farmers owe the banks 1.2 billion dollars, while the ‘one time settlement’ offer would cost 2.5 billion dollars to the government exchequer.

But most Vidarbha farmers are outside the limit. As farmer Vitthal Elkunchwar, 60, in Bhadumri village in Yavatmal district, puts it, "The total loan waiver is for 2 ha farmers, but thousands of farmers like me have land holdings of five acres, or just over 2 ha."

He owns 2-ha-2-R which equals 5 acres of land. ‘R’ is an old unit of land measurement. One acre of land is 40-R. He misses the cut off for total waiver by 2-R.

Nanda Bhandare, the widow of Dnyaneshwar, a farmer with six acres who committed suicide in 2005 owing to distress, can barely hide her tears. She cannot avail of the total waiver. With two children and her old mother-in-law to look after, she has struggled. "I can’t repay my loans; the land is giving me no income," she cries.

In Katiyar Village, Akola District, Jyoti Deshmukh’s husband who owned 20 acres of cotton land killed himself in 2007. Before that her brother-in-law and father-in-law took their lives.

Farm leader in Wardha, Vijay Jawandhia, believes the loan waiver package benefits western Maharashtra’s farmers more than those in Vidarbha. "When the country enacted the Land Ceiling Act, it imposed a ceiling of 18 acres on irrigated areas and 54 acres in the dry land areas. Naturally, 30 years later, farmers with irrigated land have smaller land holdings than their counterparts in the rain-fed areas."

As a result the average per capita holding in Vidarbha is 3.03 ha (7.5 acre), which is far bigger than the average of 1.75 ha in the sugar belt of the Pune revenue division. More importantly, the average loan burden on Vidarbha farmers is only 200 dollars, a fourth of the average outstanding loans of farmers in the irrigated western Maharashtra districts, as per the government’s cooperative department’s records.

The average crop loan from the banks for sugarcane is 325 dollars per acre. Apart from which farmers get up to 450 dollars per acre for drip irrigation. In Vidarbha’s cotton regions, the average loan is just 110 dollars per acre. The scale of the finance minister’s write-off for relatively better off farmers is greater.

Maharashtra minister for cooperation Patangrao Kadam says the state would get benefits to the tune of 3.2 billion dollars, or over a fifth of Chidambaram’s 15 billion dollars waiver outlay. But, Vidarbha’s share would be around Rs 375 million dollars, while that of western Maharashtra about 1.5 billion dollars.

The agriculture department&#39s statistics show that roughly half of Vidarbha’s 3.5 million households have up to 2 ha of land. Of this, 760,000 farmers have less than 1 ha. It is not clear how many get bank loans. By one estimate, more than half of Vidarbha&#39s distressed farmers are out of the formal credit basket.

"That is one reason why thousands of them borrow money from private usurers at exorbitant rates for farm and domestic needs," explains Mohan Jadhav in Pandharkawda town, Yavatmal district.

Often poor farmers are not the land owners, and hence ineligible for bank loans. Most land holders do not bother to transfer holdings to their name. Farms are shown as undivided in village records even years after it was partitioned among family members.

Farm leaders like Jawandhia point out that by itself Chidambaram’s total farm loan waiver is puny when compared with the annual tax and duty concessions given to a handful of industries.

Loan write-offs to industry are done quietly. Between 2000-04, government-controlled banks cancelled a staggering 11 billion dollars, mainly to a few wealthy people.

Every year banks write off 20,499 crore rupees (5.1 billion dollars) as bad debts for industry, which is the total amount owed to banks by some 7 million farmers with less than 1 ha land. This is from the Reserve Bank of India’s, Handbook of Statistics on the Indian Economy, 2006-07.

Thirty year-old Vandana Shende’s husband was driven to suicide by debts two years ago. "We were unable to repay debts. Even today, much of that loan remains to be repaid," says the frail woman, who has been tilling the land, a little over 2 ha. "Of the 85,000 rupees (2,125 dollars) I owe, 15,000 rupees (375 dollars) is from the bank, the rest is from private sources," she confides. "Over two thirds of Vidarbha farmers&#39 debts are on non-institutional credit," says Kishor Tiwari of the Vidarbha Jan Andolan Samiti, a farmers’ movement.

A Planning Commission team that visited Vidarbha in 2006 found banks considered only a quarter of cotton farmers as credit worthy. It was only after Prime Minister Manmohan Singh&#39s much-publicised two-day visit (Jun. 30 and Jul 1) that the number of farmers in institutional credit went up to 50 percent in Vidarbha.

Munna Bolenwar, a farmer with 15 acres of unproductive and unirrigated land in Vidarbha, shares his anguish. "The government has provided relief to sugarcane farmers, when the real distress is here," he told IPS.

(*This is the third and final story in a series on the role of subsidies in Indian agriculture.)

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