Maharashtra polls: Inadequate, untimely crop loans in Latur force hapless farmers into arms of high-interest money lenders
If a farmer borrows Rs 1 lakh from a sahucar, he is likely to be charged anywhere between Rs 36,000 to Rs 1.2 lakh an interest each year. In Latur, targeted crop loan disbursement was almost Rs 1,900 crore for the Kharif season. The disbursement, however, is 55 percent; In Marathwada, the number stands at 31 percent.
Sahucars' farmers call them land sharks. When farmers fail to get credit from legitimate sources ahead of the sowing period, they turn to sahucars
If a farmer borrows Rs 1 lakh from a sahucar, he or she is likely to be charged anywhere between Rs 36,000 to Rs 1.2 lakh an interest each year
In Latur, targeted crop loan disbursement was almost Rs 1,900 crore for the Kharif season. The disbursement, however, is 55 percent; In Marathwada, the number stands at 31 percent
The Maharashtra Money-Lending (Regulation) Act of 2014 requires moneylenders to be licensed, and caps the interest rate at 12 percent per year. But it only exists on paper
Life-size portraits of former Maharashtra chief minister Vilasrao Deshmukh and former prime minister Jawaharlal Nehru are up on the wall of a compact rectangular room. Sitting under it with his arms resting on two pillows is a gentleman lambasting the Maharashtra state government for its apathy towards farmers. "The state government is merely interested in lip service," he says, clad in an ironed white kurta and sporting a Gandhi topi. "Did they get karjamafi? Are the banks disbursing crop loans?"
What he does not mention is the state's inability to provide credit to farmers is directly proportional to his own prosperity. Based in the outskirts of Latur, he is a private moneylender, or a sahucar. Farmers call them land sharks. When farmers fail to get credit from legitimate sources ahead of the sowing period, they turn to sahucars.
The sahucars release money without batting an eyelid, but only against the mortgage of a part of the farmer's land. The sahucar this reporter met in Latur has 100 acres against his name. "It is from the time of my forefather's," he says. His father was sahucar, too and he has only followed in his footsteps. It is an open secret in the village. But he is allowed the pretence and the conversation continues.
"Don't the sahucars charge 15 percent interest rates per month?"
"It mostly ranges between 3 percent to 10 percent," he quickly corrects me while taking out his smartphone and ordering a cup of coffee from a hotel on the highway.
Three to ten percent a month means 36 to 120 percent interest per year. If a farmer borrows Rs 1 lakh from a sahucar, he or she is likely to be charged anywhere between Rs 36,000 to Rs 1.2 lakh an interest each year. "More often than not, we keep paying the interest, and the principal amount remains as it is," says 48-year-old Dhondrao Girhane from Halgara village in Latur's Nilanga taluk. He has borrowed Rs 1 lakh at 3 percent per month.
"When we cannot repay in cash, we send our harvest instead. It continues until we eventually lose our land. But you do not think of these consequences when you need cash during an emergency or ahead of a cropping season. The banks don't even entertain us."
The proliferating web of private moneylenders in Maharashtra is not a new phenomena. However, anecdotal evidence suggests their demand has increased since 2017.
In June 2017, chief minister Devendra Fadnavis announced the "biggest ever" farm loan waiver of Rs 34,000 crore, which has still not been enforced completely. In other words, until farm loans are waived off, the banks cannot disburse fresh crop loans to farmers. The financial year of 2017-18 clocked a minus 50 percent of year-on-year growth in terms of agriculture credit disbursement, according to the May 2018 report of State Level Bankers' Committee (SLBC). The following year, as well, the crop loan disbursement was inadequate.
Perhaps realising the looming credit crisis in Maharashtra, Fadnavis in May 2019 okayed a credit plan of Rs 87,000 crore for agriculture. He urged the banks to give maximum loans to farmers by being sensitive in order to achieve the target. But only 45 percent of the targeted crop loan disbursement in Maharashtra has been achieved for the Kharif season till 15 September, 2019.
In the district of Latur, the targeted crop loan disbursement was almost Rs 1,900 crore for the Kharif season. The disbursement, however, is 55 percent. In the agrarian region of Marathwada, under which Latur falls, the number stands at 31 percent. Girhane says the government's relief package is "a bit like having jaggery rubbed against your elbow". "You can see it. But you cannot taste it," he says. "At the end of the day, we are forced to approach sahucars. We are forced to beg shopkeepers to sell seeds, fertilisers and pesticides on credit."
Nilesh Bhutada, owner of Ambika Fertilisers in Latur, says he has sold material worth Rs 10 crore in the current financial year, and 25 percent of it is on credit. "Selling material on credit is not uncommon, but it is increasing every year," he says. "The problem is that the companies I deal with have become stricter, and I cannot afford it after a point." Latur has one of the biggest agriculture markets in the state. Farmers arrive at the mandi, sell their harvest, and buy material for their farm from the 118 shops lined up in the area. The state of the economy here gives a sense of the entire district. "My sales are down by 40 percent this season," says Bhutada.
It has the potential to influence voters on 21 October when the state goes to elections, and in Latur, it probably will, because the Congress is active and visible in the district, unlike most other parts of the state. With six Assembly seats on offer, the Congress is most likely to secure three.
Bastion of former chief minister Vilasrao Deshmukh, the Congress cadres here is loyal to his sons, Amit and Dhiraj, both likely to win from their respective constituencies. A local corporator, requesting anonymity, says Amit would hardly be seen without his fancy sunglasses when Vilasrao was alive. Describing how inaccessible they were, the corporator said, "The windows of their car would always be up. After Vilasrao's death, and the Congress' slide, he has started mingling more with the common people. He has had to shed his arrogance."
The ruling alliance of BJP and Shiv Sena is not putting up a fight in two of these six constituencies. The candidates against Amit and Dhiraj are on their own, and have hardly hosted a big leader's rally. However, on Sunday (13 October), Congress leader and former party chief Rahul Gandhi addressed a rally in Latur and slammed the ruling dispensation for giving "free pass" to corporates, in spite of their NPA, while the farmers are jailed if they fail to repay their loans.
Pasha Patel, a senior farm leader and chairman of Maharashtra Commission for Agricultural Costs and Prices, said the District Cooperative Banks are struggling financially and nationalised banks are not keen on giving loans to farmers as they think it is a loss-making profession.
Minister of rural development, women and child welfare Pankaja Munde said that the state gives a target to banks every year but they are not achieving the target. "We are not happy with it," she said. "But increasing debts must be the reason behind it."
In times of lack of credit-raising facilities, farmers have to turn to alternate sources, one of which are the private moneylenders. The Maharashtra Money-Lending (Regulation) Act of 2014 requires moneylenders to be licensed, and caps the interest rate at 12 percent per year. But it only exists on paper. In reality, they wield tremendous influence and power, and it is impossible for a farmer to stand up to them.
The sahucar says an acre's market rate is about Rs 10-12 lakh in Latur. "But farmers are asked to mortgage an acre for a loan of Rs 1 lakh," he adds. "In a sense, the land is obtained at 10 percent of the cost. I know a sahucar with over 1200 acres of land. He does not even know where half of it is." But, apparently, the man with 1,200 acres of farmers' land is not all that bad. "He only got it as security against the money he lent," he says.
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