Coronavirus-related cash crunch, delayed loans present threat to upcoming Kharif season for Maharashtra's farmers
Halgare, resident of Anandwadi village in Latur district, is among the lakhs of farmers in Maharashtra who could see their entire cropping season go down the drain if they don't receive their loans on time
Mukhtar Halgare, 50, has a dark analogy to describe the issuance of crop loans. "A glass of water when you are thirsty is more meaningful than a tanker after you are dead," he says, "We are farmers, and farming is a time-bound profession. We need crop loans to prepare for the Kharif season that begins in mid-June. The sowing process is just days away, but the bank isn't releasing the loan."
Halgare, resident of Anandwadi village in Latur district, is among the lakhs of farmers in Maharashtra who could see their entire cropping season go down the drain if they don't receive their loans on time. "Without crop loans, I can't buy seeds, fertilisers or pesticides. I can't employ labourers to prepare the land ahead of the season. It basically means I can't farm without a crop loan. What hurts even more is that I am technically entitled to avail of a fresh crop loan, but can't," he sighs.
Halgare's bank is unable to extend a crop loan to him, because he already owes Rs one lakh to the bank. However, he is eligible for a farm loan waiver that the Uddhav Thackeray-led Maharashtra government announced in December 2019. "I was on cloud nine when I found out it would be waived," he recalls. But the relief was short-lived. On 24 March, Prime Minister Narendra Modi announced a nationwide shutdown to contain the spread of coronavirus. The states too ended up diverting their resources and energies to the pandemic. Therefore, the enforcement of the farm loan waiver fell by the wayside. Halgare's account is still a Non-Performing Asset (NPA) on paper.
Halgare isn’t alone in this tantalising situation. There are over 11 lakh farmers like that in Maharashtra, who are eligible for a loan waiver but have not yet received it yet. The banks need to receive the amount from the government to waive the concerned farm loans. Until then, the banks cannot issue fresh loans to the account holder.
The 11 lakh farmers are supposed to get a waiver of Rs 8,200 crore, according to Balasaheb Patil, cooperative minister in the Maharashtra government. "Due to the coronavirus, we didn't declare another list of farmers eligible for the waiver," he says, "We have waived the loans of 19 lakh farmers so far. But the banks should finance the rest of the 11 lakh too. The state has taken guarantee of their loans.”
On 22 May, the state government issued a circular, marking the State Level Bankers Committee of Maharashtra (SLBC), NABARD, RBI and all the district magistrates, among others. The circular read, "The revenue of the state has dried up due to the pandemic. And the available resources have been concentrated on dealing with it. Therefore, it would not be immediately possible to release the remaining money for the loan waiver. However, the farmers that are eligible for a loan waiver but have not received it yet should be extended crop loans. The banks should mark their amount as 'to be received from the state government'."
However, there is a catch. The banks — nationalised and cooperative — are not answerable to the state government.
The SLBC has a lead bank in every district of the state, overseeing bank transactions and implementation of various schemes. Off the record interactions with lead bank managers indicate that the banks would not be able to follow the state government's diktat until they get a directive from the RBI.
A lead bank manager, requesting anonymity, says the RBI regulates banks. "We do not come under the purview of the state government. If the Centre issues a resolution for banks, that goes through the RBI for implementation as well. So if the banks need to get something done, they need RBI directives," he notes.
The bank manager adds that the state's assurances of paying for the farm loan waiver are insufficient. "If the bank issues a fresh crop loan to a farmer who already has an NPA account, it increases the bank NPAs,” he says. “It means the bank has to make extra provision, which requires a certain kind of leverage. In the absence of that leverage, the government has to pump in money, because the banks also need to maintain capital adequacy. The state, along with the centre and RBI, would have to address these technicalities.”
Patil, meanwhile, says the state is speaking to the Centre to iron out the technicalities. "We are expecting clarity soon," he says.
However, soon may not be soon enough for the 11 lakh farmers currently stuck in deep waters. Every season, farmers prepare their farmland around this period. With the help of crop loans, they buy seeds, fertilisers and pesticides, and wait for the monsoon. Once the rains arrive in their respective regions, they start sowing their crops, which ideally should happen in a week from now.
But if the farmers don't get crop loans quickly, they won't be able to do any of that.
It would be another blow in a series of setbacks they have endured since the lockdown. Uddhav Ghodke, a farm activist based in Beed district, says there was unseasonal rain and hailstorms in some parts of Maharashtra that destroyed miles of farmland since March. "Also, the harvest for the Rabi season concluded just around the time the coronavirus started getting serious in India," he says, "The prices collapsed at that time, and farmers had to sell their harvest at a throwaway cost. Further, the lockdown paralysed transport completely in the initial days. Countless farmers saw their perishable harvest rot in front of them. They could not take their stock to the mandi."
Tulshiram Khote, 58, in Beed's Georai taluka, still has 10 to 12 quintals of cotton lying on his farm. He should ideally have been able to sell it at least two months ago. "There are 2,500 people who have registered to sell their cotton in my taluka. Even if I had sold my cotton, I could have managed for the Kharif season without a crop loan. The cotton is worth Rs 50,000 or so," he says.
Khote has an existing bank loan of Rs 69,000. Like Halgare, he is eligible for a waiver, but hasn't received it because of coronavirus and the lockdown. "I plant cotton and tur in my 4.5 acres of farmland. For every acre, I need Rs 10,000. If I don't get a crop loan, I would have to borrow money from a private moneylender, who will charge three percent interest per month, which would be a death knell. Or I would have to implore the shopkeepers to sell me seed and fertiliser on credit. I don't think they would agree to that in the current economic circumstances," he says.
Khote says regardless of the loan waiver, it has become a pattern over the past few years to not issue crop loans on time, but dangle them in front of the farmers to keep them hopeful. He too has a darkly funny analogy to describe the situation. "It is like rubbing jaggery against your elbow; you know it is there. But you can't taste it."
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