Celebrating Diwali during a downturn
11 min read 23 Oct 2019, 09:46 PM ISTA field report from the agriculturally prosperous heartland reveals a lacklustre festival of lightsDelay in farm loan waivers has worsened farmers’ credit score. So, financiers are unwilling to advance new loans to them for buying farm equipment
PremiumSRI GANGANAGAR : "How are you going to celebrate Diwali?" My question gets Roopa Ram, an elderly farmer, so amused that he thinks it’s important to do some explaining to a reporter from Delhi. So, he sits down, making space for himself in a tiny grocery store in Jorkia, a village on the north-western edge of Rajasthan, adjacent to India’s border with Pakistan. “This is chugai season... the time to pluck cotton (the main cash crop of the region). So, everyone works till afternoon. Even on the day of Diwali. No one wants to lose the ₹7 they get for every kilogramme of cotton they pluck," he says.
“They then return home, freshen up, and head to the market to buy a kilogramme of jalebi and potatoes, and, maybe, some firecrackers. Outside homes, earthen lamps are lit. The oil is poured in such measly quantities that the lamps go off by eight in the evening. Women make poori to go with a curry made with boiled potatoes. Youngsters in the village celebrating the short-lived earnings from plucking cotton get drunk on country liquor. Then, they struggle to find potatoes in the curry. The old get to taste the jalebi, if any is left. That is how we celebrate," he adds.
Ram’s point is simple. There is nothing special about Diwali, especially for those on the margins. But that is not the entire story of Srikaranpur. For a tehsil in the agriculturally prosperous Sri Ganganagar district of Rajasthan, where it is common to find farmers whose hobbies range from rearing horses to tending to pedigree dogs, the festive season usually means discretionary spending—buying a new vehicle or getting their house painted. But crops like cotton and green gram are now selling at lower-than-expected prices. The downturn this Diwali season is so dire that even large land owners (owning 50 to 150 acres of land) are postponing the purchase of a new tractor or the replacement of an old car.
It has been a tough season, for sure. Farmers in Sri Ganganagar had to weather the impact of deficient rains during the southwest monsoon, which is increasingly becoming erratic. The rural income scenario in Ganganagar is in many ways representative of the mood in India’s agricultural heartland, which has been battling low farm-gate prices and stagnant wages for several years now.
The demand depression has now begun to hit the sales of consumer goods, automobiles, and farm machinery. The uncertainty about the stability of future income has hit even well-to-do farmers, making them postpone new purchases.
Rural consumption of packaged consumer goods fell to a seven-year low in the September quarter, growing at just 5% compared to 20% in the same period last year, market research firm Nielsen said last week. Also, for the first time in seven years, rural sales of packaged consumer goods grew at a slower pace than urban markets. The signs were already there: for several months now, retail food inflation is either near-zero or negative in rural areas, indicating that an income squeeze is impacting demand for even daily staples.
The market
With merely a week to go for Diwali, the mood is tepid in Srikaranpur’s market, situated adjacent to the railway station where express trains en route to Bikaner (240 kilometers away) halt for two minutes. There are no festive lights or loud music. Shops selling consumer durables, clothes, and groceries are mostly empty. The thin crowds tend to gravitate towards carts where tomatoes and fruits are disposed off at a bargain price before they shrivel by the next morning.
Around 7.30pm, the jewellers begin to down shutters. “Today is Karwa Chauth (a popular north Indian festival when married women fast for the long life of their spouses), but people are not even buying nose pins for their fasting wives," says Babbu Soni, a jeweller. There is no point in keeping a shop open when there aren’t enough buyers.
At the largest market in Raisingh Nagar, an hour’s drive from Srikaranpur, a Hero MotoCorp showroom with a stock of 150 motorcycles is yet to see a single customer for the day. “Last year, we sold around 210 motorcycles (in 30 days) between Navratri and Diwali. This year, we have sold 50 so far," says Yogesh Sharma, a salesperson, who keeps a close tab on price movements in the wholesale crop market.
At the Bajaj showroom in Srikaranpur, sales enquiries are a bit better. Diwali offers and cheaper models have prevented any slide in sales, says Beant Singh, the owner of the shop.
Our business is closely tied to farm income, Sharma said. “This year, yields are poor due to less rain and crop prices are down too." According to Sharma, the next uptick in sales could take another six months when the winter crop will be harvested in May.
Sunil Vasvani, though, disagrees that the general mood is one of uncertainty and gloom.
A dealer of popular packaged consumer goods brands like Hindustan Unilever, Dabur and Marico, Vasvani feels some of the noise about an economic slowdown is politically motivated. But, then, he immediately opens up about the weak points in his business—cash stuck with retailers, big retail chains eating into his sales, and cut-throat competition among dealers reducing his profit margin. “In two years, my business may be finished," he says.
Others in the rural economic chain are a bit more upset about the turn in their fortunes. “I have to pay ₹15,000 as school fees for my children, but I am struggling to put the money together," says Sohan Lal, who rents out sound systems for cultural and social events. Last year, the ram-leela organizers paid Lal ₹20,000 for the entire event held during the Navratri week. This year, he had to make do with ₹17,000.
The wholesale market
Over six-foot-tall, Ranjeet Singh Raju barely fits into the hatchback that he rides to the nearest wholesale market to enquire about crop prices. Along the way, perched in the middle of the freshly harvested fields one can spot army bunkers— rusted blocks of iron plastered with mud. These have been lying unused since the 1971 war with Pakistan and are now mostly used as lovers’ nest, jokes Raju. The conversation soon turns to the dwindling prospects in farming.
Raju, who cultivates a variety of cash crops on 150 acres of family land, wants to send his son to Australia for studies and also wants him to settle there. But Raju won’t be leaving the ancestral village where he now stays with his wife and three dogs—Mojo, Bella, and Panther. “Most farmers here are heavily indebted due to the rising costs of farming and low prices. It will be wage earners making a killing in the cotton-plucking season who will perhaps bring rounak (glitter) to the Diwali market, not us," he says.
Beyond minor repairs to his sprawling bungalow, Raju is unwilling to spend on anything that may be remotely discretionary. Some months ago, he sold his sports-utility vehicles for ₹11 lakh and purchased a second-hand hatchback for less than ₹3 lakh. “My friends told me a small car is way below my economic and social status. But, I think it is important to be cautious in these times," says Raju, who has a debt of over ₹50 lakh.
At the Srikaranpur mandi (wholesale market), hills of white cotton lie interspersed with the light brown patches of guar seeds and the green mounds of moong. Farmers wait for their crop to be auctioned, but the final prices sink their hopes. Cotton is selling for ₹4,900 per quintal, less than the price it sold for last year and at least ₹500 lower than the minimum support price (MSP) announced by the government. Moong, or green gram, is selling between ₹5,800 to ₹6,000 per quintal, also less than the MSP of ₹7050 per quintal. The price of guar or cluster beans, another cash crop, has nosedived from over ₹12,000 per quintal in 2012-13 to a low of ₹3,500 per quintal.
Farmers complain that the state government will begin limited procurement at MSPs starting 1 November, a few days after Diwali, and over a month-and-a-half after the harvesting began. Since there are no elections around the corner, it hardly matters for the government how farmers are faring, they say.
Softening demand
A quick survey of 12 farmers gathered at a trader’s office in the mandi was proof of what analysts call “softening demand". Not one among them had purchased a tractor over the past year, while only one had purchased a motorcycle. Five of them owned cars, but none had bought a new one in five years.
Outside the mandi, local tractor dealers are rattled by the bleak sales. “Farmers prefer to repair old tractors or buy a second-hand one than taking another loan to purchase a new tractor," says Harjinder Singh, the local dealer of John Deere. Between June and mid-October, Singh has sold 11 tractors, less than half the usual numbers.
“October is the peak season and I have sold just two tractors so far, that too after a lot of coaxing and cajoling," says Ashwini Sharma, a dealer of Mahindra Tractors. A sales representative sitting in Sharma’s shop adds that about 155 tractors were confiscated by finance companies in Bikaner over the past two years from farmers who were unable to repay their loans. “Why should a farmer buy a new tractor when these are still available at a heavy discount," he asks.
If Sharma is to be believed, there is another side to this story. Ahead of the state assembly elections last December, the Congress government had promised to waive crop loans up to ₹2 lakh, but, so far, little progress has been made. Farmers who are waiting for the waiver are not repaying bank loans. This has worsened their credit score. So, financiers are unwilling to advance new loans to farmers for buying farm equipment (like tractors).
“Farmers effectively have no control over either markets or the weather or even the government," says Pushpinder Singh, while tending to his horse in Jorkia village. “Why should I buy a new car when my debts have shot through the roof?" Singh, though, has a plan. He is desperately trying to migrate to Australia. The plan is that his wife, who now works with a public sector bank, will study in Australia while he will drive a cab. All this is to secure his future, says Singh, who now farms, jointly with his brother, on 100 acres of land.
The mourning
Singh’s residence is designed to resemble a government rest house with a lush green lawn. The hamlet hosting daily wagers is a short walk away. Early in the morning, families are busy preparing for a long day in the cotton fields. A couple working through the day can earn up to ₹1,000 from plucking cotton during the peak season.
But the prosperity is short-lived, lasting not more than a month. For instance, Ram Kumar can expect to earn over ₹20,000 in October, but much of it will be used to settle debts accumulated during the lean months when work was difficult to come by. Kumar had built a one-room house a few years ago, but could not afford a concrete roof. He used a mix of plastic sheets and hay to make a temporary cover. His most prized assets are half a dozen goats which can be sold in an emergency. Kumar’s last big purchase was a second-hand motorcycle that he bought for ₹20,000 a few years ago.
“For us, Diwali means some sweets and a few firecrackers. I cannot afford new clothes for my children," Kumar says before heading off to the field, while his wife packed him lunch—a stack of rotis and a bowl of roasted green chillies, the most common diet of daily wage earners in rural India. The family cannot afford pulses more than once or twice a week; green vegetables are a delicacy.
Back at the grocery store, where Roopa Ram spoke elaborately about Diwali celebrations, the owner, Rama Ram, showed a cane basket with a dozen shrivelled egg plants, unsold for five days. They are ready for his own kitchen. In the one hour this writer spent in his shop last week, the only customers were two school-going children purchasing pens for ₹5 apiece. “Usually, I do not stock any packed item which costs more than ₹10. Those are difficult to sell," Roopa Ram says, pointing to a ₹20 pack of butter cookies nearing expiry which “only zamindars or sardars (rich farmers) can afford".
Of all the people Mint met over two days in Sri Ganganagar last week, only one person was eagerly waiting for Diwali. Or rather, for Diwali to pass. The reason had nothing to do with festivity or celebration. Ganga Devi can begin working as a daily wage labourer only after 27 October. It is customary for a woman whose husband has died to let the festive season pass before stepping out of the house.
On 23 June, Devi’s husband, Sohan Lal, a small farmer and kirana store owner who also doubled up as a mason, committed suicide. Before consuming pesticide, he blamed the state government for not fulfilling its pre-election promise to waive farm loans and posted a video on WhatsApp groups, bidding goodbye to friends and pleading with them to take care of his family.
Lal’s death forced his college-going daughter Meenakshi and 16-year-old son Ghanshyam to become agricultural labourers. Devi is now looking forward to joining them after Diwali. An extra pair of hands would help her children miss fewer days of school. The wages from the last few days of the annual cotton chugai season would mean a temporary respite from eating a frugal meal of rotis and chillies.
The lights and sweets and celebration of Diwali can wait—till, perhaps, another year, when things are a bit better.
