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How politicians killed farmers

Thousands of debt-related suicides have followed a govt decision taken 10 years ago

india Updated: Jan 23, 2006 02:24 IST

When Laxman Adhao set himself on fire at the Amravati District Collectorate on January 20, his death became the latest in the series of suicides committed by debt-hit farmers in the state. It was typical of that of farmer after farmer who preferred death to moneylenders’ harassment.

But is the Maharashtra government, which publicly laments the situation, itself responsible for the over 3,000 suicides by farmers in the last 10 years?

Successive state governments have blamed the suicides on private moneylenders. But, it seems, that it was the withdrawal of a bank guarantee by the government in 1996 that drove farmers to moneylenders in the first place.

Way back in 1935, the British set up land development banks (LDBs) that loaned money to farmers at fair rates and stymied private lending. In Maharashtra, the Maharashtra State Cooperative Agriculture Rural and Multipurpose Development Bank (MASCARDB) offered long-term credit, while district LDBs (funded by MASCARDB) offered short- and medium-term credit. MASCARDB has 20 lakh farmer members, hence controlling it automatically results in political control over a large rural votebank.

MASCARDB had been lending up to Rs 200 crore until 1996-97. Of this, up to Rs 190 crore came from National Bank for Agriculture and Rural Development (NABARD) under a state government guarantee. Till the guarantee existed, MASCARDB remained well funded by NABARD and there were no suicides. The farmers fared well with organised loans at 7 to 13 per cent interest over 15-year periods.

But in 1996, the Manohar Joshi government decided to block the guarantee, turning off NABARD funding. By November 2002, MASCARDB ran out of resources and was set up for liquidation.

Journalist Madhu Akotkar, who filed a PIL against the government in December 2002, alleges a political vendetta. According to him, the Joshi government let the bank bleed after failing to get political control over it.

Farmer suicides were first recorded in 1997 and have continued unabated since then. While the government admits to over 1,000 suicides, Prof. Ajay Dandekar, formerly with Tata Institute of Social Science, who did a study for the Mumbai High Court in March 2005, pegs the number at over 3,000.

It is significant that the highest suicide rates are recorded in districts where LDBs are up for liquidation or are doing badly.

Says N.D. Patil, founder of the Peasants and Workers Party that supported the Congress-NCP government of 1999, “The Joshi government may have had a financial crunch.” But why did subsequent governments not do anything? “Negligence, probably.”

In April 2004, the new Central Government declared that agriculture was it focus and gave NABARD Rs 39,000 crore to disburse. MASCARDB could have got a lion’s share, but lack of a state government guarantee to NABARD means that it can give the state’s farmers nothing.

Patil says that the present government is “looking at reversing the decision (to withdraw the guarantee).” But with farmer suicides rising fast, no action can come fast enough.