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Debts lead to despair and disaster

india Updated: Oct 16, 2006 01:26 IST
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In the past three months in Maharashtra's Vidarbha region, one farmer committed suicide every eight hours. And since January this year, 950 farmers have taken their lives either by consuming pesticides or by hanging themselves in this cotton-producing region.

What began in Andhra Pradesh and Punjab in the mid nineties has spread across the country. In six years till 2003, for which government figures are available, around one lakh farmers have taken this extreme step, in the most productive years of their lives.

Analysing the causes of suicide, a Tata Institute of Social Sciences (TISS) study found that 85 per cent of victims in Maharashtra were in heavy debts due to repeated crop failure and rising input costs. The study revealed that the trend was not restricted to a typical income level or landholding category.

The TISS report cites the example of a high-caste farmer who had to sell off seven out of his twelve acres of land to repay a loan of Rs 15,000 to a moneylender. The farmer again borrowed another Rs 10,000 from the same moneylender to cultivate his remaining land. After three years of repeated crop failure and more loans, his debt swelled to Rs 35,000. Unable to pay back, he committed suicide in 2003.

The phenomenon of heavy debts has developed over time. With public investment in the agriculture sector dropping from 14.9 per cent in the first Five Year Plan to 5.2 per cent in the current plan, the farmers are being forced to put in more and more investment in their crops.

Even the government's Situation Assessment Survey of Farmers last year found that 48.6 per cent peasant families are deeply indebted due to declining public investment in the agriculture sector.

A 2003 RBI report highlighted that rural lending from government banks declined from 15.9 per cent in 1990 to 9.8 per cent in 2003. This shift, the report said, compelled small and middle farmers to turn to private moneylenders for loans at interest rates ranging between 40 and 120 per cent per annum, to purchase seeds, fertiliser and other inputs. A World Bank study in 2004 says 75 per cent farmers in India have borrowed money for agriculture inputs from non-formal sources.

Moneylenders, who also act as input suppliers, advance loans to farmers on the condition that they would sell their produce to them at a price significantly lower than the government procurement price. This makes sure that the farmer stays indebted year after year, sometimes  losing his meagre property and land in the bargain.

According to India Together, a grass root NGO, Ayya Atram, a 28-year-old Yavatmal farmer hanged himself on last Independence Day after the moneylender appropriated his land despite the Rs 3,000 interest payment on Rs 20,000 loan for six months.

The NGO has recorded numerous other examples to note that such cases are becoming common due to a consistent lack of policy interventions or prevention strategies in India, which, as the next story notes, are showing positive results elsewhere in the world.

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