Why Loan Waiver Won’t Help Farmers
October rains add to misery of Maharashtra farmers.
Haribhao Govind Phonde applied for a loan waiver after Maharashtra agreed to pardon farmers’ debt. But the onion grower from Nashik, some 200 kilometres north-east of Mumbai, said it won’t bail him out even as the state started releasing funds for the scheme.
October rains damaged about 60 percent of Phonde’s crop. “Traders are unwilling to pay the usual price for the wet produce,” he said at the Vinchur farm auction market at Lasalgaon, home to Asia’s largest onion yard.
Chief Minister Devendra Fadnavis tweeted the government released Rs 4,000 crore in the first phase of the Rs 34,000-crore waiver on October 18 as a “Diwali gift”. Yet, farmers BloombergQuint spoke to in Nashik said it isn’t a happy festival for them this year. Already under debt, they have lost a bulk of the monsoon crop of soyabean, onions and grapes. Whatever is left won’t help recoup costs.
Phonde had borrowed more than Rs 2 lakh from banks, while the state will repay loans worth Rs 1.5 lakh each. To get the relief, he will have to pay back the rest upfront, according to the waiver norms.
For Pandit Bhaskar Jadhav, that’s the bigger worry. He owes his bank Rs 6 lakh on a loan he took a couple of years ago for his two-acre soyabean farm at Lasalgaon. Paying Rs 4.5 lakh first won’t be easy. A damaged crop has only made it worse.
Jadhav was seeking buyers for his eight quintals of produce. The partly discoloured and wet crop got quotes of Rs 2,300 a quintal, while the more damaged beans received a bid of Rs 1,000. Last year, he made Rs 3,000 a quintal on an average.
“It takes about Rs 35,000 to sow and grow soyabean, but the current rates will barely get me Rs 22,000-25,000,” Jadhav said.
Maharashtra is India’s largest grape-producing state, with Nashik and Sangli districts contributing the highest. Rains have damaged the produce in the region where wine-maker Sula also has vineyards.
Vijay Palve said he lost 70 percent of his grapes. “Last year, I got around Rs 50 a kilo. Even that was less as I need at least Rs 60 to sustain my farm. This time, I don’t know how much of the crop will even survive,” he said.
His father Motiram Palve tends to the family’s onion and corn fields. “I used to get about Rs 15,000 an acre for onion. Half the crop in the 5-acre farm has been damaged,” he said.
The Palves are among the nearly 60 lakh farmers waiting for the state to repay their loans, after Maharashtra joined Uttar Pradesh in foregoing farm loans. Punjab and Karnataka followed, triggering worries about states’ fiscal health and inflation. The worst impact, according to Reserve Bank of India Governor Urjit Patel, will be on credit discipline as it discriminates against those who repay loans on time.
Datturam Mohmakhre agrees. The corn grower said he has an outstanding amount of Rs 1.75 lakh and has been repaying his debt on time. While the government will waive Rs 25,000 each for those like him, Mohmakhre said it’s not fair. His crop is damaged and prices have fallen from more than Rs 2,500 a quintal to Rs 1,700.
“I have been repaying regularly. With a damaged crop, I don't know how I will we pay my loan. Why are we overlooked?”