Loan waiver: Distressed farmers are not celebrating

The proposed debt relief measures for farmers in the Union Budget generated faint smiles across the emerald fields of Punjab, the country's traditional wheat granary holding a bumper crop this season.

But the hardy Jat farmers of the state are not celebrating yet, viewing the loan waiver as a 'temporary crisis management measure' by political parties ahead of an impending election.

"Ninety per cent of farmers in Punjab are in debt and majority of them have taken loans from private sources and not banks," said Shamsher Singh, 56, a well-to-do farmer from Hari Majra village in Patiala district.

Shamsher Singh should know, as he is also director of the Kheti Vikas Bank, Chandigarh. "Punjab's farmers will not benefit until the loans from 'arhtiyas' (commission agents) are not waived completely," he said.

Going by National Sample Survey Organisation's (NSSO) figures, every farmer household in India was having an average outstanding loan of Rs 1,258. In Punjab, it was the highest at Rs 41,576 (December 2003 figures).

The recovery rate of institutional loan in Punjab was 85 per cent, again highest in the country, which meant the overdue loan was about 15 per cent. A bank official in Chandigarh said it was a very complex process to find out how much amount is overdue towards small and marginal farmers.

But it was said that Rs 15,219 crore (Rs 152.19 billion) was advanced by commercial banks, Rs 4,080 crore (Rs 40.8 billion) by cooperative banks and Rs 1,974 crore (Rs 19.74 billion) by Punjab Agriculture Development Bank.

Thus rough estimates hinted that Punjab farmers would benefit by anything between Rs 800 crore (Rs 8 billion) to Rs 1,000 crore (Rs 10 billion) under the loan waiver scheme.

Compared to their contribution to the nation's food security, this benefit was considered far less to manage the crisis of 3.47 crore marginal and small farmers and 87 lakh other farmers in the state.

The non-institutional loan was the biggest evil because of its high proportion according to some estimates 50 to 55 per cent of total agriculture loan and high rate of interest, pegged at 26 per cent annually.

Then there were other problems facing Punjab's agriculture; ground water depletion, soil erosion and environmental degradation. Farmers' organisations said this was a direct fallout of Punjab's success story since the ushering in of the green revolution.

"Punjab has been contributing the largest share of wheat and rice to the Central pool for well over four decades. In the process it has suffered grossly," said Umendra Dutt of Kheti Virasat Mission (KVM), Faridkot.

Dutt said the Punjab agriculture model was a 'paradigm mistake' and thousands of farmers had committed suicide as a result of deceleration of agricultural growth since the mid-1980s.

The KVM had taken the Punjab farmers' cause and was involved in what it called 'dismantling the old paradigm by promoting an eco-friendly version of green revolution'.

Called Nanak Kheti, Dutt described it as a farmers' movement for ecology to change the entire food culture corrupted by the use of chemicals and practice of monoculture. Some 200 villages in 60 blocks across Punjab had joined KVM's effort, he claimed.

Beginning April 2007, KVM adopted five villages in Bhatinda and Faridkot districts, aiming to change the mindset of the Punjab farmer. "To begin with, we want to dismantle the aura surrounding the Punjab Agriculture University and let every farmer know that he is an expert. He should take pride in himself and turn to natural farming. This alone can save him from suicide," said Dutt.

Darshan Singh, a 50-year-old farmer practising Nanak Kheti at Dabrikhana in Faridkot district, said: "Necessity is the mother of all invention. The need to live a healthy life compelled me to adopt Nanak Kheti, which is natural farming. There is no violence against the earth in Nanak Kheti," he said.

Fellow farmers told Darshan Singh he was being foolish. "They argued that use of chemicals gives you 18-20 quintals of wheat an acre, while natural farming will yield hardly 10-12 quintals. But my answer was I am saving on fertilizers and pesticides. And when I start getting additional crop, I will sell it to the health conscious urban population for a higher price," he said.

Darshan Singh has set aside one acre from his total holding of 18 acres for natural farming, but is already convinced about increasing this acreage for natural farming in the coming season.

However, his childhood friend and neighbour, Labh Singh, who too has turned to Nanak Kheti, is not convinced yet of the benefits. "The yield is so-so, just enough for my household consumption," he said. But Labh Singh also conceded that his was a 'typical Jat mentality' and went on to explain: "We continue to seek loans for buying expensive seeds, fertilisers and pesticides. Only when we incur losses we stop to think, that is if we have not committed suicide already".

There are no official figures of farmer suicides in Punjab. In November last, the Movement Against State Repression (MASR) wrote to Lok Sabha Speaker Somnath Chatterjee and all members of Parliament, listing seven different estimates of the number of suicides in Punjab pending an official survey by the state government. The suicide figures ranged from a handful to several thousands.

While the Punjab government's status report listed 2,114 farmer suicides during 1988-2004, the Punjab Farmers Commission 2006 said some 2,000 farmers were ending lives every year.

The MASR's own estimate for 1988-2006 was around 60,000 suicides, while surprisingly the Punjab Police Report 2007 listed only seven suicides in as many years, and the Punjab revenue report for 2007 conceded 132 suicides in past five years.

MASR convenor Inderjit Singh Jaijee said: "The Central government is willing to concede suicides in Maharashtra and the southern states but not in Punjab because the state has long been projected as an agricultural success story. If government admits farmers in Punjab are distressed it would mean agriculture in India was on the verge of collapse."

Jaijee felt natural and organic farming had limited scope considering the scope of crisis in Punjab. "It is cushioning the emiseration of the farmer, who, thanks to the thrust of the green revolution, has moved from one crop to two crops a year. Therefore, his losses are proportionally more than other states," he explained.

The MASR had in 2001 apprised the powers that be in New Delhi and Chandigarh that suicide is violence turned inward in Punjab. "It will not be long before anger and despair are turned outward and result in social and political turmoil," it stated in a memorandum.

MASR's data from an in-depth census of 1,508 suicides from 1988 onwards in Moonak sub-division comprising 91 villages exposes how inadequate loan waivers would prove in the case of Punjab farmer.

Farmers committing suicide by consuming poison, hanging or throwing themselves under speeding trains are between 19-50 years. They are landless or owning up to 10 acres with debts ranging from Rs 20,000 to Rs 700,000, but majority of them owing agriculture debts less than 100,000. The least developed south-eastern region of Punjab bordering Haryana is the worst affected.

The causes for the past two decades of the Punjab farmer's downward spiral into debt are many but a major part of the blame falls on the inequitable cost/price structure, non-availability of credit, high rates of interest and restrictions on trade and ceiling on agriculture land.

In the absence of a holistic approach, the loan waiver shall prove to be only a temporary crisis management measure in Punjab as elsewhere in the country.