Bonanza by-passes most farmers

Pimparkhuti, Maharashtra: Just before India's finance minister was announcing a massive farm bonanza last month, Narendra Totaram Chauhan quietly slipped into his cotton fields, opened a bottle of pesticide and drank it.

By the time the minister finished announcing a $15-billion (Dh55 billion) loan waiver to give a new lease of life to millions of indebted farmers, the poison had snuffed the life out of Chauhan.

Over the next few days, while experts debated the efficacy of the staggering relief package, 60 farmers killed themselves, adding to a morbid official statistic: more than 150,000 Indian farmers committed suicide since 1997 unable to repay crop loans.

Though the crisis has been building for years, it presents a grave challenge for Prime Minister Manmohan Singh ahead of national polls next year. Farm distress and soaring prices helped turf out the previous government in 2004 and put Singh in power.

So, Singh's government came up with a plan in the 2008-09 budget: cancel debts of small farmers with loans overdue on December 31, 2007, and which remained unpaid up to February 29.

Riders

The write-off came with riders. Beneficiaries can own up to two hectares and only bank loans will be cancelled.

This has meant nearly a quarter of 40 million targeted farmers will not benefit because most borrowed from rapacious moneylenders or they own larger tracts of land.

"It's a lose-lose proposition. This will not relieve farmers' distress," said Kishor Tiwari, who leads a campaign against farmers' suicides across the arid plateaus of central India.

A map of the region, known as Vidarbha, hangs on Tiwari's office wall. Its most prominent markings are a profusion of black skulls, forming a grim diagram of death. Here, across the black cotton-bearing soil of Vidarbha, far from the gleaming malls that symbolise India's economic boom, three million desperately poor farmers are fighting for survival.

More than 30,000 farmers have killed themselves in the region alone since 1997, making it the epicentre of India's grimmest agrarian crisis in recent memory.

But relief is still a distant dream for a majority of farmers here because their average holding is just above two hectares. And small and marginal farmers will not benefit because most of them borrowed from moneylenders and relatives.

Its the same story in the northern Punjab state, considered India's food bowl where rising cultivation costs are distressing farmers and leading many to commit suicide or to abandon farming. As in Vidarbha, the southern states of Andhra Pradesh and Karnataka, which have reported thousands of farmers' suicides, have dry croplands where large holdings are unviable for a farmer with limited access to irrigation and loans.

Liberalisation

The National Sample Survey Organisation says almost half of India's 100 million farming families are in debt. India's stunning urban-centric economic growth has bypassed the farm sector where growth is estimated to have slowed to 2.6 per cent in the year ending March 2008, from 3.8 per cent the year before.

Even though farming supports 60 per cent of India's 1.1 billion people, it contributes only a fifth of gross domestic product and accounts for only around 15 per cent of bank credit. Economic liberalisation since 1991 has not helped either, with duties being gradually phased out and farmers facing tough competition from heavily subsidised European or American growers. Bad weather and falling prices only compound debts.