Loan waiver offers little relief to Karnataka farmers

loan,loan waiver,loan waiver offer
There have been complaints about the alleged delay in implementation of the waiver, with farmers getting restive after the third year of drought in four years.(PTI)

Biliaiah, a 59-year-old farmer in Maddur taluka of drought-hit Karnataka, killed himself by drinking poison on his three-acre plot a month ago. His widow Shashikala is yet to figure out how deep in debt he was or even who his creditors were.

All she knows is that he took new loans to pay off old debts at a time when he had been forced to leave most of his land fallow because he couldn’t afford to pay for a new borewell. He also borrowed money to admit his son and daughter in private colleges in Mandya town. He wanted them to study so they could stay far away from agriculture.

“As far as I know, the loans were taken by pledging whatever little jewellery we had because we didn’t have proper land documents, making us ineligible for banks loans,” Shashikala said. She estimates that Biliaiah took up to Rs 3 lakh in loans, most of which were “borrowings from other farmers and relatives”.

Biliaiah is one of 154 farmers in Karnataka who have killed themselves in the past six months, according to the Karnataka agriculture department which, farmers’ unions claim, routinely plays down the death count.

After assuming office in May, chief minister HD Kumaraswamy said he would waive all crop loans farmers had taken from commercial banks and cooperative societies in a bid to reduce agrarian distress in the drought-prone state. The waiver, estimated to cost the state Rs 45,000 crore, was by way of fulfilling promises made in the manifesto of the Janata Dal (Secular) that is now ruling Karnataka in alliance with the Congress. In addition, the state government promulgated the Karnataka Debt Relief Ordinance, which is yet to receive the President’s assent.

To be sure, Karnataka isn’t alone in confronting agrarian distress that has forced debt-burdened farmers to kill themselves. Across the country, farmers are battling a crisis caused by a slump in commodity prices after producing a bumper harvest. On Friday, the Centre announced a Rs 75,000 crore income support scheme for small and marginal farmers in its interim budget ahead of general elections.

Similar farm loan waivers were announced by recently installed Congress governments in Madhya Pradesh, Rajasthan and Chhattisgarh, too. Yet, most farmers in Karnataka’s Mandya believe the move is a mere palliative and does not strike at the root of the problem, a fact even the chief minister has acknowledged multiple times.

Although Biliaiah hails from Maddur, one of only 20 taluks among Karnataka’s 176 that has not been declared drought-hit, he had to rely on borewells because water from the Cauvery river barely reached his village. “That is why I had to work on other farmers’ plots to support my husband,” Shashikala said.

Without proper documents for the land that is registered in his grandfather’s name, Biliaiah had no option but to depend on other farmers, pawnbrokers and private moneylenders to find capital to invest in his land, she said.

Compared to the distress suffered by Biliaiah, the story of Chandrashekhar, who cultivates sugarcane and paddy on his two-acre plot, is upbeat. He is set to benefit from loan waivers for a second time.

Last year, about Rs 50,000 he had borrowed from cooperative banks was waived as part of a scheme announced by former chief minister Siddaramaiah. Now, another Rs 50,000 taken from a commercial bank is set to be waived by Kumaraswamy. “I haven’t received the debt-free certificate yet, but I’ve been promised that I will benefit,” he said. Getting down to the nitty-gritty, he continued, “Of course, the waiver is necessary but if you deduct Rs 50,000 from [my dues] this year, that leaves me with a cumulative debt of ~3 lakh, mostly taken from private moneylenders and some relatives.”

There have been complaints about the alleged delay in implementation of the waiver, with farmers getting restive after the third year of drought in four years. A senior government official involved in the disbursement, who spoke on condition of anonymity, said that as of January 28, ~768 crore worth of loans taken from cooperative institutions and Rs 672.5 crore borrowed from commercial banks had been waived, benefitting 290,000 farmers. The delay, a term the official protested against, was caused by the need to collect data on the extent of debt owed by the state’s farmers. With each family set to benefit by ~ 2 lakh, it was imperative to collect more details about the 4.1 million crop loan accounts.

Armed with a new software, the government has created a vast database, the government official cited above said. “We forced cooperative institutions to digitise their records to ensure the same person would not get a waiver for loans taken from both cooperative and commercial banks,” he said. That process has been completed and the waiver picked up pace in January.

However, Chandrashekhar’s concern lies elsewhere. “Clearly, it will help, but there are more pressing issues that governments need to address. For example, even where it has set a floor price for crops like paddy at Rs1,700 per quintal, we get only Rs 1,200,” he said. That figure is just about the average cost of cultivation calculated by the Karnataka Agricultural Prices Commission (KAPC), which had estimated the cost per quintal for 2017-18 at Rs 1,150.

Agricultural economist Prakash Kammaradi, who is chairman of the KAPC, said a comprehensive approach is required to tackle indebtedness. “Unfortunately, we are looking at it only from a political angle,” he said.

Kammaradi said there would be no solution to the crisis in agriculture without acknowledging the low profitability in the sector. “This is shown, for example, in the fact that as on date 16% of cultivable land has been left fallow in the state,” he said.