Saturday, May 25, 2013

Vidarbha Saga-Who killed Namdeo-Business Standard

Vidarbha Saga-Who killed Namdeo

The latest suicide in Vidarbha underlines the need for flexible loan repayment norms for farmers
Sreelatha Menon  |  New Delhi  May 25, 2013 
Sreelatha Menon
Is it better to give compensation to dead farmers, or to provide loans and insurance to those who are alive?

In the case of a majority of cotton farmers in Maharashtra, who are struggling against shrinking land size, production costs and debts, there is neither credit or insurance when alive nor compensation on death.

Farmers caught in a debt trap are forced to kill themselves - as in the case of Namdeo Gandhewar.

The 47-year-old cotton farmer of Pumpri village in Kelapur taluka of Yavatmal district in Vidarbha committed suicide on May 20 by consuming pesticide. His suicide may not even be recognised as a farmer's suicide by those empowered to give compensation to his widow; only one out of 20 cases get recognised as a suicide, according to Vidarbha activists.

Farmers are often denied institutional credit. Eighty per cent of them are defaulters, and are not eligible for bank loans. The state has not bothered to approach the Reserve Bank of India (RBI) to seek reconstruction of loans to enable defaulters to repay and seek fresh loans, says Kishore Tiwari of Vidarbha Jan Andolan Samiti. This is despite the RBI's willingness to consider it, he says.

The recent comment of the Commission for Agriculture Costs and Prices' chairman on the minimum support price (MSP) of cotton is an example of what the state goes on to do. Any increase in MSP beyond Rs 100 has been ruled out for a crop that costs Rs 6,000 per acre, even by the formula used for calculating MSP, says Tiwari.

Namdeo had three acres and had taken a crop loan of Rs 40,000 last year. He took another loan from a moneylender to repay the bank this year. The bank agreed to give him a fresh loan to repay the moneylender, but it got delayed, even as the moneylender's interests kept soaring by the day.

The man was diabetic and his illness was costing him a lot, too. The family of four was living in abject poverty, says Tiwari. Namdeo cannot be called credit-starved. He was caught in a cycle of debts, and no money to plant the next crop.

In Yavatmal district, the banks have set a credit target of Rs 1,286 crore this year, of which Rs 143 crore has already been disbursed. While the credit doors are closed for a majority of farmers, the other hope for small farmers like Namdeo could have been crop insurance, for which the state is yet to demand changes in the norms from the insurance authorities. The insurance should be for each village rather than each block, says Vijay Jhawandhia, an activist from Vidarbha. And the insurance product should also cover a minimum income, he says. But there is no move towards any such a reform.

The 12th Plan document talks about pooling small holdings into land banks to shield small farmers from losses. If this works out fast, maybe there would be hope for small farmers like Namdeo.

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