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Loan waiver will do little for Vidarbha farmers

The biggest farm loan write-off in India’s history will do little for the men who need the most help: the farmers in the suicide-prone belt of Vidarbha in Maharashtra, reports Chitrangada Choudhury.
Hindustan Times | By Chitrangada Choudhury, Mumbai
UPDATED ON MAR 11, 2008 01:11 AM IST

The biggest farm loan write-off in India’s history will do little for the men who need the most help: the farmers in the suicide-prone belt of Vidarbha in Maharashtra. It will benefit farmers in Maharashtra’s six richest districts, among them Union Agriculture Minister Sharad Pawar’s home district of Pune.

The Union Budget had offered a complete loan write-off for farmers with up to 2 hectares of land, and discounted loans for farmers with larger farms.

Of the Rs 12,375 crore loan write off for Maharashtra's farmers, Rs 10,500 crore will comprise this complete erasure of loans for small farmers(see box). Of this, only Rs 536 crore (or 5 per cent) will be for Vidarbha, where over 2,100 farmers have killed themselves since Prime Minister Manmohan Singh visited the region in July 2006.

Only 4 lakh of the estimated 17 lakh cotton-growing households in this region will get complete waivers. Another 2.5 lakh farmers holding over 2 hectares of land will have their loans reduced to the tune of Rs 488 crore.

These details have emerged from an analysis (to which the Hindustan Times has obtained access) by the state’s agriculture and co-operative departments.

In six districts in Maharashtra’s prosperous swathe of sugarcane and grape farms stretching from Jalgaon in the north to Kolhapur in the south, farmers are seeing a write-off of close to four times that, or Rs 2,437 crore. Another 4.4 lakh farmers with farms larger than 2 hectares will see their loans reduced to the tune of Rs 1,973 crore.

The state government is now asking the Centre for a sharper targeting of the waiver, saying that size of land holdings should not be the sole determinant.

“We want them to write off farm loans of up to Rs 50,000, irrespective of the size of a farmer’s land. These issues will emerge in the Parliament’s discussion of the budget,” said Minister of Agriculture Balasaheb Thorat.

He said Vidarbha’s poor irrigation meant that farmers with holdings of over 2 hectares were also in heavy debt, but will not have loans waived. These farmers have bigger plots of land, but no access to irrigation.

They have to depend merely on the monsoon. The state has found that 98 per cent of farmers who kill themselves had no provisions of irrigation.

An analysis by economist Srijit Mishra, who was on a panel set up by the Prime Minister to study rural indebtedness, shows that while only 50 per cent of farmers in Yavatmal (one of the Vidarbha districts that has reported the most number of suicides) have holdings below 2 hectares, 76 per cent of farmers in Pune district fall in this category, making them eligible for the waiver.

Mishra said: “The waiver accepts a crisis. But there is nothing above it to stymie the crisis, to address its roots.”

Agrarian economist Ajay Dandekar, who studied the suicides for the Bombay High Court in 2004, agreed: “In Vidarbha, the crisis has been in the making for several years, putting farmers out of the formal credit system three or four years back. Moneylending is rampant. The write off might turn out to be a great Indian rope trick unless authorities look at the specifics of Vidarbha, where farmers need measures that will leave money in their hands, like fair pricing.”

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