Withering lives

Print edition : July 30, 2004

The failure of institutional credit sources to increase disbursals could worsen the plight of the peasantry in Andhra Pradesh. - P.V. SIVAKUMAR

The moratorium announced by the Andhra Pradesh government, despite shortcomings, has the potential to give respite to farmers in distress. But there is no sign of a long-term strategy to revive agriculture and thus put an end to the rural tragedy.

THE wave of suicides by peasants in Andhra Pradesh continues unabated. The toll since mid-May headed past 400 by early July even though the State government had announced a series of relief measures. Although the new Congress (I) government headed by Y.S. Rajasekhara Reddy is generally regarded as being more farmer-friendly than the N. Chandrababu Naidu dispensation, it is increasingly evident that the alarming situation needs much more than good intentions. In particular, the passage of a law on June 21 to enforce a six-month moratorium on loans taken by peasants in the State appears to be utterly inadequate. The plight of the poor and marginal farmers who remain mired in debt, taken mostly from private moneylenders, is likely to worsen if concomitant steps are not taken on an urgent basis. Nothing highlights this urgency more than the fact that in just four days after the passage of the Andhra Pradesh Farmers Agricultural Debts (Moratorium) Act, 34 peasants committed suicide.

Moving the Bill in the State Assembly, the Minister for Revenue, Relief and Rehabilitation Dharmana Prasada Rao stated that peasants in the State had suffered heavy losses because of drought for a number of years. Moreover they had suffered "molestation and harassment" by rural moneylenders, "eventually forcing them to resort to the extreme step of committing suicide". He said the six-month moratorium on farm-related debts would provide relief to farmers.

Ironically, the Telugu Desam Party, which had consistently refused to provide the peasants any relief package during its nine-year rule claiming that it would only encourage them to commit suicide, sang a different tune when the Bill came up for discussion in the Assembly. TDP legislators said a six-month moratorium was inadequate. They demanded a two-year moratorium for not only farmers but also artisans, agricultural workers and weavers. They also called for extending the scope of the legislation, which is applicable only to loans advanced by private moneylenders. Claiming that more than 500 farmers had committee suicide since the Congress government assumed power on May 14, the TDP said the Act should cover loans advanced by institutional credit sources such as banks and credit cooperatives also. Rajya Sabha member Ramamohana Rao of the TDP demanded that the State government declare a three-year moratorium on all agricultural debts of farmers.

THE issue of a moratorium on repayment of debt is a crucial step because it is the swiftest way of lifting the sword of death that hangs over the peasant's head. But it is also obvious that this can only be the first in a series of steps that the government has to take. The continuing spiral of death clearly shows that a six-month moratorium can, at best, be a part of a larger package that addresses the factors that have driven peasants to debt and eventually to their death. If the understanding is that the debt burden that the peasant carries is a result of policies that have made agriculture an unviable endeavour, then the moratorium needs to be backed up by medium to long-term measures.

It is also becoming clear that the effectiveness of the moratorium package is severely constrained by several factors. Since credit from institutional sources hardly accounts for 15-20 per cent of the credit requirements of farmers, they depend heavily on private sources of credit. This has important implications. Evidence from the field indicates that these creditors also have an extensive network and reach in the agricultural economy, particularly in the markets for inputs, produce and even the land that is leased to peasants. Political commentators have argued that this cross-play of powerful interests represents a powerful bloc, which strives to block any attempt at offering a moratorium on debts issued by private creditors.

While this is only to be expected, the failure of institutional lenders to step up credit at a time of dire need is the other side of the problem. The Union Finance Minister's announcement on June 19 that credit for agriculture will expand two fold in the next three years has to be seen in the light of the actual situation on the ground. In Andhra Pradesh, for instance, institutional credit has consistently failed to meet targets. The notion of a credit card for farmers has always been the butt of jokes but it takes on a particularly ironical twist in the case of Andhra Pradesh. According to official sources, a total of 56.63 lakh Kisan Credit Cards have been issued in the State until March-end this year. The total amount outstanding on these cards is Rs.9,826 crores, implying that each card has an outstanding amount of Rs.17,350. It is obvious that the distribution of credit from schemes such as these is extremely skewed in favour of richer farmers. Not a single family of suicide victims that this correspondent met - mostly small and marginal peasants, or tenant cultivators - mentioned that they ever saw anything resembling the Kisan Credit Card. Andhra Pradesh is one of the leading States in the matter of issuing Kisan Credit Cards, accounting for about 15 per cent of the cards issued in the country.

Moreover, the dynamics of a liberal financial regime have a crucial bearing on the way rural credit is distributed. For instance, it is well known that public sector banks and cooperative institutions have their own tricks to pad their books to inflate the volume of credit that they advance to borrowers. Making "book adjustments" is one such trick. This is done to recycle existing debts and show them as "fresh" issues of debt. More important, the "reorientation" of banking activity has led to the closure of rural branches. In effect, the infrastructure for rural lending has been significantly weakened on the ground.

The fact that suicides have been reported from every single district of the State, barring Hyderabad, clearly shows that blaming "drought" for the crisis will no longer do. But politicians and bureaucrats continue to do just that. This is having adverse consequences for desperate peasants. For instance, a circular dated June 16 issued by the Andhra Pradesh State Cooperative Bank (APCOB), the State-level apex institution governing credit cooperatives, asked district-level and primary cooperatives to "go ahead with recovery of loans in mandals not declared as drought affected during the year 2003-2004". This is a clear indication that in mandals not declared as "drought affected", the cooperatives continue to pressure the peasants for recoveries even as they are supposedly protected from private moneylenders by the recent legislation.

APART from its narrow focus on private moneylenders, the moratorium suffers from other serious limitations. Malla Reddy, general secretary of the Andhra Pradesh Rythu Sangham, said that a six-month moratorium would provide little relief because most cash crops have a much longer cropping cycle. Crops such as turmeric, sugarcane and banana have a cycle of about ten months, which means that peasants growing these crops would be exposed to the caprices of moneylenders well before they actually are able to tide over their immediate and pressing debt problems. "A moratorium of six months makes no sense. It has to last at least one year for it to provide protection to farmers," he said.

The failure of the cooperatives is illustrated by the fact that although 1.39 crore farmers in the State are members of credit cooperatives, only 38 lakh farmers have obtained loans from the sector. Moreover, peasants who are unable to repay their existing loans find it difficult to obtain fresh loans to meet their immediate needs in the ongoing sowing season. Referring to a recent survey conducted by the Rythu Sangham, Malla Reddy said that farmers, who are increasingly dependent on borewells, have undertaken enormous risks. He said that the risks were compounded by the government's failure to provide technical and financial assistance to farmers. He demanded that geologists be posted in each mandal in order to provide expert guidance and advice to farmers.

B.V. Raghavalu, secretary of the Andhra Pradesh State Committee of the Communist Party of India (Marxist), said that the Act only allows a moratorium on loans drawn by farmers for "agricultural purposes". He points out that the "format" for promissory notes issued by borrowers when they draw loans from private moneylenders generally mentions "family or personal expenses" as the reason for taking the advance from lenders. Raghavalu said that this is "a loophole in the Act, which the government did not rectify even when it was pointed out to it".

Malla Reddy observed that in parts of the State, moneylenders are refusing to lend to peasants because of the fear that loan recoveries would be jeopardised by the moratorium. For instance, in Cherial mandal of Warangal district moneylenders and suppliers of inputs such as pesticides are refusing to lend to the peasants. "The small and marginal farmers in the State require a complete moratorium for one year so that they have the breathing space." Malla Reddy pointed out that the failure of institutional credit sources to increase disbursals would worsen the plight of the peasantry.

Although Raghavalu said that despite its serious shortcomings, the Act was "useful" for the peasantry. "The Act can be an instrument that can provide respite to the peasantry now and enable it to resist the moneylenders. If the peasantry is able to organise itself now, it can draw long-term benefits from this piece of legislation."

Recent reports indicate that the despondency among the peasantry is giving way to anger. Farmers have demanded that bank officials give them a better deal. The Chief General Manager of the State Bank of India was gheraoed by peasant activists on July 5 in Anantapur. They demanded that the bank reschedule crop loans, issue fresh loans and not insist that farmers repay dues in order to get fresh loans. They also alleged that SBI had not rescheduled crop loans despite a Reserve Bank of India directive to banks. This, despite the fact that all 63 mandals in Anantapur district had been officially declared drought-hit in the last four years.

The Prime Minister has come and gone but death continues its march on the countryside.

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