Budget snippets: Vidarbha farmers rue Chidu's loan waiver

by FP Staff  Feb 15, 2013 15:19 IST

#budget2013-videos   #Coimbatore   #Loan Waiver   #VeryCloseUp   #Vidarbha  

Loan waiver: Vidarbha farmers against free dole but want the right price for their produce

Even though Congress leaders are pressing finance minister P Chidambaram for another loan waiver scheme similar to the one promised in the 2008 budget, a CNN IBN investigation in Vidarbha has found that despite the scheme, farmers who were offered the scheme back then continue to struggle with debt due to the inability to repay loans as cotton production has fallen 40 percent in the region.

Four daughtersof the late 35-year-old Indian cotton farmer Neelkhant Haste mourn his death with a picture of him, after Haste committed suicide by consuming pesticide. Desperate and debt-ridden with loan sharks demanding up to 120 percent annual interest, the failed harvests and tumbling prices have driven businesses to the wall and farmers to suicide. AFP

Four daughtersof the late 35-year-old Indian cotton farmer Neelkhant Haste mourn his death with a picture of him, after Haste committed suicide by consuming pesticide. Desperate and debt-ridden with loan sharks demanding up to 120 percent annual interest, the failed harvests and tumbling prices have driven businesses to the wall and farmers to suicide. AFP

As per the scheme, farmers holding up to 5 acres got a full waiver. Those with larger holding could claim a 20 percent write-off, but only after they paid back the remaining loan amount. However, those with more than five acres of land were unable to raise the amount needed to write off a loan while those whose loans were waived off are back in debt because they do not have the money to buy seeds and fertilisers for crops.

"The rural bank in the village got Rs 1 crore as part of the waiver scheme. It now has Rs 3.5 crore worth of non performing assets on its books," said the report.

Crop failure, debt pushes 22 farmers in Yavatmal to commit suicide in Jan, Feb

Meanwhile, the situation in  Yavatmal in Maharashtra is even worse. The district has witnessed 22 farmer deaths in the first two months of the new year due to crop  failure and debt.

A case in point is Chandrakala Meisram, who marked Republid Day as Black Day following the death of her husband. Despite owning three acres of land, she was unable to pay back the Rs 17,000 loan her husband had taken for cotton production. She has to make ends meet with daily wages as she has two daughters too.

The situation at the cotton mandi at Pandharkawada is worse as farmers have to make do with distress sales at the auction to pay off money lenders.  Atthe end of the auction, farmers are unable to get anything above the minimum support price of Rs 3,900. Even government statistics have shown crop failure on four million hectares of irrigated land. Yet  none of the districts in the region are covered in the recent Rs 778 crore relief aid announced by the Centre to the state.

The government in 2012 reduced the minimum support price to Rs 3,960 from Rs 4,500 a quintal. However, farmers lament that this is not viable or affordable as seeds for harvesting are too costly. Those opposed to BT cotton blame the genetically modified crop which they claim demands higher fertilizers and water making it a risky crop. In many areas, the yield has increased and the crop is better, but cost of cultivation is almost double.

Farmers held on to the cotton, thinking the government will wake up and revise the prices. Now, they are forced to offload raw cotton at throwaway prices. Only urgent relief on the MSP front and compensation for cotton failure can help alleviate distress that is forcing farmers to kill themselves.

Tirupur loses its sheen as knitware capital of India

While the government's economic policies have clearly failed in Maharashtra, the boost given to he textile industry down south did not yield any results either. In fact from its peak in 2005, when exports from Tirupur reached Rs 12,000, the city today is a ghost town, with business down by more than half.

Shops are shut, streets are deserted, factories are shuttered.

The downfall began with the closure of all dyeing units a few years ago, for polluting the Noyal river.When the dyeing units closed down many labourers left the city and migrated to Gujarat.

Secondly, the recession in the US and Europe, competition from countries like Bangladesh  has brought the  knitwear industry to its knees.

CNN-IBN met second generation industrialist R Raj Kumar, one of the lucky ones whose company, Best Corporation, survived the downturn. But it has been a struggle and critical issues continue to challenge the industry. "Starting with reducing orders from EU and US and other global issues, we have issues here in terms of price fluctuation," Raj Kumar said.

The units, however, are now cleaning up their act. Machinery has been modernised and effluent treatment plants are being set up. But, beyond the shop floor the government needs to urgently sign the free trade agreement with the European Union to bring Tirupur at par Bangladesh.

Coimbatore industries on the verge of closure as power crisis worsens

The lack of investor-friendly measures and policy decisions has resulted in Coimbatore, which is one of the fastest growing cities in India, losing its market share in the manufacturing of pumps and foundries.

Wind energy producers are no longer interested in setting up new mills in the state due to the huge backlog in paying off arrears and the low procurement price of wind energy. The Tamil Nadu electricity board owes Rs 3 500 crore to producers, which have been accumulated over the past 16 months.

Wind energy producers blame the shift in withdrawal of incentives by the Centre in recent months. The Centre has been giving 80 percent accelerated depreciation to wind power producers. This would mean subsidies that allowed domestic firms to save costs incurred in the maintenance of windmills through tax savers and enabled them to invest in new windmills.

Foreign firms were given a subsidy of 50 per unit produced. However, the Union government scrapped these incentives from April 1 last year.

Speaking to CNN IBN, executive director KS Sundararaman of Shiva Textyarn, said he has invested heavily in technology to keep his plant competitive. But crippling power cuts, lasting over 14 hours, have rendered the technology obsolete. Tamil Nadu is 4,000 MW short of power and it will go up by another 1,500 MW as summer approaches.

"Seventy percent of power woes will be met by our wind farms, but the TN electricity board has a problem in evacuation of power and giving us in the right time and they also have a policy that during peak power crisis they don't allow us to take credit for the power generated by our own unit. So what happens is though I have just 70 percent of my load end of the year at least for this 1 unit I'll be billing around 50 lakh units of power at a low rate of Rs 2.75 to the government and I lose money. The wind mills haven't helped me," Sundararaman said.

But it's not just the big industries that are being hit. Several employed in the cottage industry are being forced to shut shop due to crippling power cuts. The industry is demanding lower interest loans and restructuring of existing loans to tide over the crisis.

Coimbatore has huge potential in the solar power sector and experts feel governmental subsidy and loans at affordable rates can help trade and industry set up their own units.

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