Amravati: In Maharashtra’s Vidarbha region, where the word “suicide” has long lost its sting, the Centre’s loan write-off should ideally have brought some cheer to farmers, some of whose relatives or friends killed themselves because they could no longer service their debts.
That is because the government’s ambitious and populist loan waiver that will write off debts of around 43 million farmers aggregating Rs71,800 crore, is not meant for big farmers—owning 5 acres or more—even if all they have is land.
Cheerless melody: A group of people in Balegaon, Yavatmal, sing for heavy rains. The government’s populist loan waiver that will write off debts of around 43 million farmers is not meant for big farmers. (Photo: Mehak Kasbekar/Mint)
With just a few days to go for the implementation of the government’s loan waiver package, Vijay Vasantrao Thavale, 40, who belongs to Kondhali village in the region, is preparing to sell off his land—all 18 acres of it—to repay his five-year-old debt.
Under the debt waiver, the dues of small and marginal farmers (around 37 million of them) owning up to 2ha of land (nearly 5 acres), and whose loans were overdue at the end of December, will be entirely written off.
Other farmers who have overdue loans are expected to get a 25% waiver if they promise to pay up the rest of the loan by June 2009.
“I have been unable to repay the bank loan for the past five years and now I owe Rs3 lakh (jointly to Bank of India and a cooperative bank). Selling the land is the only way out, before the situation goes completely out of control,” said Thavale, who at least has land to sell to pay up his loan.
Bankers term farmers such as him asset-rich but cash poor. At least one-tenth of the farmers at Kondhali, 50km from Nagpur, are asset-rich, according to data available with the Bank of India branch in the village.
Untouched by government waivers and relief, these farmers with land holdings of 5 acres or more say they are likely to remain in debt for the rest of their lives.
According to a Bank of India official who asked not to be named, there are around 200 farmers in this village who have availed of loans (and not repaid them) and who own more than 5 acres of land.
That is a story that repeats itself across Vidarbha. “All across Vidarbha, defaults among big farmers are high compared with the rest of Maharashtra,” said a State Bank of India officer in Amravati who did not wish to be identified.
The total number of those farmers considered “big” in the Vidarbha region, which comprises two of the six administrative divisions of Maharashtra—Nagpur and Amravati—couldn’t be ascertained. The 11 districts that come under the area are Akola, Amravati, Bhandara, Buldana, Chandrapur, Gadchiroli, Gondia, Nagpur, Wardha, Washim and Yavatmal.
Like Thavale, 60% of farmers in Kondhali grow soya bean. Most “big” farmers need a tractor to till their lands and have taken loans to buy the machines that cost at least Rs5.5 lakh. Most default and barely manage to pay the interest back, said the State Bank of India official.
Thavale said agriculture is becoming unviable by the day and the loan waiver is not going to solve the problem. “The government doesn’t realize that this year you may have given the defaulters relief but they will have the same problem next year as well. Farmers need to be cash-rich to invest in the crop—to buy seeds and fertilizers... Input costs are rising by the day,” he added.
Chandrabhan Nathu Hingwe of Thane Gaon, a village in Wardha district, has a deadpan expression on his face instead of a smile as he walks out of a Bank of India branch, which has just sanctioned him loan for a tractor.
Hingwe, who owns 11 acres of land, has been servicing a Rs25,000 crop loan for the past 10 years. He said he would not service his loan this year. “I was paying to maintain a credit record with the bank, but I now feel cheated (because defaulters have suddenly had their loans waived and their credit records have become clean),” he added.
Meanwhile, some bankers said that some big farmers have begun to divide their plots in areas of less than 5 acres each. “They (the big farmers) now know how to avail of subsidies and waivers,” said S.H. Shrote, a district coordinator at the State Bank of India branch in Amravati. For them, it is the only way out of the debt cycle, he added.