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India's farmers doubt Delhi's big aid pledge

Many don't believe the government's Feb. 29 plan to waive debts will be fulfilled.

By Staff writer of The Christian Science Monitor / March 11, 2008

Waist-high in debt: Gopriram Dhamad, a farmer in Rohtak, has taken out one loan at 24 percent interest to pay off another.

Mark Sappenfield

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ROHTAK, INDIA

Alongside a rural highway here thronged with farm tractors and cars, there is one sign more common than any ad for prime real estate or the wisdom of local gurus. It is a political billboard, campaign-style, stating that the government has essentially saved India's small farmers by pledging $15 billion in the new budget to pay their chronic debts.

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Not far from the highway, Gopiram Dhamad stands, waist-high in his wheat field – and in debt. He has taken a loan from a moneylender at 24 percent interest just to pay the interest on a larger loan of $3,750. How he will pay any of it back while living on about 50 cents a day seems impossible.

Mr. Dhamad is precisely the sort of farmer the government is trying to save from hopelessness and perhaps even death – more than 17,000 indebted farmers in India committed suicide in 2006 alone. Yet he doesn't expect a cent from the government scheme, which was announced in the annual budget on Feb. 29, saying that previous efforts have been beset by corruption and inefficiency.

In other parts of the country, where the crisis of suicides is the greatest, experts say the plan is poorly drawn. By excluding farmers with more than five acres, it leaves out those who are most at risk.

With elections coming up in states across India this year, the plan is a populist attempt to boost the fortunes of the ruling Congress party, analysts say. But the reaction from many members of the farming community suggests that Congress's electoral trump card might have been misplayed.

"It will be helpful, but it won't help the people most affected," says Yudhvir Singh of the Bharatiya Kisan Union (BKU), or Indian Farmer's Union.

The waiver is expected to reach 4 million farmers who own fewer than five acres, in a country where two-thirds of its 1.1 billion people depend on agriculture.

The plan has its supporters. This past weekend, the Congress Party held a rally in New Delhi for farmers. The thousands who came thanked Congress for saving them from ruin.

Yet it was a political rally – Congress's opening volley in what is sure to be a summer of intense campaigning.

Here in Rohtak, a farming town an hour west of Delhi, the atmosphere is decidedly different. A crowd of men has gathered in the courtyard of the local chapter of the BKU. In a March heat that gives more than a hint of summer, flies buzz around cups of sweet milk tea like tiny clouds of shifting smoke, while turbaned men sit on beds of woven rope in the welcome shade that a nearby tree provides.

They know they are supposed to be excited by this new loan, yet the announcement has had the opposite effect. Conversation explodes into accusations and frustration – the farmers claiming that, for all the hype surrounding the announcement of the loan waiver, nothing has happened.

Ramesh Kumar Balhara waves his documents about land holdings and loans in the air as if they were a campaign speech. He has just come from the bank to inquire about the scheme. "They say they have no instructions," he declares. "They have no idea about this."

Many of the details of the loan waiver are not yet clear. The finance minister has said they will come out as the plan is discussed in parliament, and that the project will be implemented by July. But farmers here are wary.

In general, they see nothing wrong with the principle. But based on previous experience, many doubt the banks will actually follow through with loan waivers.

"When the finance ministry comes out with such measures, the banks never come on board to fully implement the scheme in question," says Ramphal Kandela, local head of the BKU. "I don't have much expectation that this will benefit many of the farmers."

Elsewhere, those few details that have emerged are causing consternation. In the area of the country where suicides are most common, farmers generally have plots larger than five acres.

"The farmers who are committing suicide will not be benefited," says Kishore Tiwari of the Jan Andolan Samiti, a farmers' advocacy group in the Vidarbha region of Maharashtra state.

At four acres, Dhamad's farm fits the guidelines perfectly – as does his situation. He has been in debt for 40 years, he says.

"Every farmer has to take out a loan to get their crop out – whether it's for seed or fertilizer or diesel," says Jagwan Singh, a farmer from a nearby village.

But this time has been different, says Dhamad, thumbing his wheat thoughtfully: His yield is down because there has been less rain. So even though wheat prices are currently fair, next month's harvest will likely only get his household through the season. It will not pay off his $3,750 loan – or the 10 percent interest.

"I don't see any way out," he says, unless rainfall increases.

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