Bangalore: A decade-old bank loan that has been racking up interest due to the bank in farmer M. Maraiah’s account will finally get wiped off through the Central government’s crop loan waiver scheme that began rolling out on Thursday.
But Maraiah is not celebrating. The farmer from Mandya, Karnataka’s most prosperous agricultural district 100km south-west of Bangalore, has sold off the very 30 guntas, or three-fourths of an acre, for which he took the loan because, for him, agriculture is just not viable. He now ekes out a living as a labourer.
“The (Rs10,000) loan had to be waived because there wasno way I could have repaid it,” he says.
Too late: M. Maraiah (left), a farmer in Karnataka’s Mandya district. A crop loan of Rs10,000 he took 10 years ago has been waived, but he has already sold off the land he had taken the loan for.
Still, Maraiah is only among a few lucky farmers in his village whose loans are being written off. There are hundreds of others here who do not qualify for the scheme.
That’s because a similar Karnataka government waiver in April 2007 had cleared short-term crop loans due to cooperative banks. The Central scheme waives loans overdue as of December 2007 but fresh loans taken by these farmers do not fall under the category.
“There’s no benefit for (farmers) in Karnataka. They had taken loans on lower rates of interest but that will not be covered now,” says M. Srinivas, the legislator from Mandya whose party Janata Dal (Secular) and its former coalition partner, the ruling Bharatiya Janata Party (BJP), brought in the state waiver scheme.
The BJP, which won state elections in May, is dealing with a fertilizer shortage that has already seen farmer protests in Karnataka’s central districts and given ammunition for opposition parties to blame the government for a spate of far-mer suicides. The government, in turn, has been saying that the Centre failed to respond to its demands for more fertilizer.
On Monday, banks were yet to obtain a consolidated figure of the total number of beneficiaries from the loan waiver in Karnataka. According to a banker working on the scheme, the figure may be about one million farmers, but the number was likely to go up when final figures are obtained in a couple of days.
However, the Karnataka State Cooperative Apex Bank Ltd says it may cover only a third of the number of farmers who were covered under the state loan waiver last year. The bank had waived outstanding dues of Rs1,850 crore under the state scheme.
In Mandya district alone, some 58,000 cooperative society members got their loans written off through the state government scheme, while only about 13,000 will be covered in the current waiver. Including commercial banks, the total number of beneficiaries would be around 70,000 and involve a sum of Rs220 crore.
Siddamadaiah, a sugar cane farmer holding 2 acres in Hansale village in Mandya, is quite happy because a loan he took from a nationalized bank in 2006 will now be wiped off. “I could not repay it as I could not sell my sugar cane crop in time,” he said.
But most farmers dismiss loan waivers as a temporary benefit. “We have to take crop loans every year and if we do not repay them one year, we won’t get one for the next,” says K. Boraiah, Mandya secretary of Karnataka Rajya Raitha Sangha, a farmers’ body. Mandya has been reeling from the effect of a global sugar glut over the past year that saw sugar cane prices in the district fall to around Rs850 per tonne from Rs1,100 per tonne.
“Farmers have been demanding simple things such as better prices for their products,” says R.S. Deshpande, head of the Agricultural Development and Rural Transformation Centre at the Bangalore-based Institute for Social and Economic Change.
Boraiah agrees: “When have you heard of farmers demanding a loan waiver?”
But the Mandya farmer may be better off than his counterparts in north Karnataka, where farmlands are largely dependent on rain. The district is irrigated by the Cauvery river and most of the fields get water round the year, thanks to extensive canal networks.
According to a state agriculture department census in 2005, districts such as Mandya, Mysore and Hassan, which have relatively better irrigational networks, have the largest number of small and marginal farmers, while the land holdings in rain-fed northern districts are bigger.
“That’s because in irrigated areas, they reach the viability threshold quickly,” says Deshpande, who says the loan waiver will benefit better-off farmers as their holdings are smaller and the waiver scheme covers mainly marginal and small farmers.
Deshpande also feels the loan schemes need to be changed. “A farmer may need only Rs5,000 in the sowing season, but he takes a loan for Rs20,000 to cover the entire crop. He cannot hold on to his money and spends it,” he says, adding that farmers could manage their loans earlier because they got better prices.