Moneylenders and landlords…. Strangling the poor
“The Deputy Chief Minister has got it wrong. He should not be persecuting and prosecuting the moneylenders (reference is to the recent move of the Government of Maharashtra against money lending).. After all without money lenders how can agriculture survive”… these astounding words are from a young farmer, also a political activist, from Bhatumba a small village in the Yavatmal district of Maharashtra. We were shocked to say the least… One expects seeds, fertilizers, and labour to be essential for the practice of agriculture but MONEYLENDERS? That was a new one… We decided to explore… This is what we saw…
Over the last many years the credit situation in the rural areas has worsened. Frequent spells of drought, increasing inputs costs, poor use of technology have made agriculture unproductive. We have covered this in detail in an earlier report. Corruption, inefficiencies, political interference have made credit co-operatives and banks (co-operative) nearly defunct. Every 10 kms one will find a failed financial institution. These institutions are leaving rural areas in droves. Almost all the farmers are indebted and defaulters to a certain extent. Some of the ‘smarter’ farmers play the waiting game by deliberately defaulting on loans. As a large farmer with an outstanding loan of Rs. 400,000/- said to us “why should I bother to pay off the loan? All I need to do when the demand for repayment comes up is pay the bank officer Rs. 5000 under the table. That takes care of the problem for one year. Next year maybe the government will write off loans or else the same formula will work. It is cheaper to do this than to pay”.
Against this backdrop is the undeniable truth that very few farmers can undertake agricultural activities without accessing credit. This is especially so because inputs have to be bought most of the time and labour paid regularly. Often it is a matter of survival for the family till the harvest comes in. In this scenario is it any wonder that the moneylender becomes an important input into agriculture. We saw rates ranging from 5% to 20% a month.. In 2004 apparently there was no credit available even at 25% a month. With interest rates at these levels how much cash profit can the farmer expect from rain-fed, small and marginal landholding?
Farmers are turning to women's self help groups as an avenue for accessing easy credit and at much more affordable terms. Compared to the moneylenders the normal SHG rate of 2% per month makes the loan almost FREE. Accessing credit then becomes the sole purpose of forming SHGs of women! These SHGs exist only on paper and are run by men themselves. We have seen 19 SHGs groups of women in one village of less than 1000 population…. None of these were meant to mobilize and empower women. None had regular meetings though savings records and minutes were impeccable. This puts paid to the entire concept of women's empowerment that the SHGs are supposed to (and touted to) foster. The banks are slowly strangling this line of credit as well by linking default of men to women's SHGs. Genuine groups also suffer because of these policies as all of us would have seen some time or other. Families are thus pushed back into the welcoming arms of the moneylenders. In the next report we will look at women's SHGs, their economic activities and ultimate impact on lives in more detail.
Another pattern we have seen in Yavatmal is that of concentrated landholding. Few families hold most of the land, a few are small farmers and rest are landless labourers. In Bellora, a village of around 2000 souls (350 families), for instance, 75% of the land was held by 8-10 families with the remaining 25% being held by another 25-30 families and the rest being landless. There were no other livelihood opportunities in the village. Still there was no significant migration. When investigated, we realized that the actual act of farming is managed by the landless for the landed gentry. They are employed on monthly (Rs. 900 + one bag of jowar) or yearly terms (8000 + 12 bags of Jowar) basis. The landowner does nothing but supervise leaving himself free to indulge in politics or other pursuits. In reality the landless are bonded but don’t realize it. The landlords are taking care to ensure that the landless are kept at an optimum level… just enough to prevent revolt and not too much to make them independent… The landless rarely have any disposable income left to think of education or health of their children who are consequently consigned to the same fate… They drop out of school at a young age and get into the workforce. The invidious cycle is thus self-sustaining…
Is it any wonder that most farmers want their children to get out of agriculture and get JOBS?
Over the last many years the credit situation in the rural areas has worsened. Frequent spells of drought, increasing inputs costs, poor use of technology have made agriculture unproductive. We have covered this in detail in an earlier report. Corruption, inefficiencies, political interference have made credit co-operatives and banks (co-operative) nearly defunct. Every 10 kms one will find a failed financial institution. These institutions are leaving rural areas in droves. Almost all the farmers are indebted and defaulters to a certain extent. Some of the ‘smarter’ farmers play the waiting game by deliberately defaulting on loans. As a large farmer with an outstanding loan of Rs. 400,000/- said to us “why should I bother to pay off the loan? All I need to do when the demand for repayment comes up is pay the bank officer Rs. 5000 under the table. That takes care of the problem for one year. Next year maybe the government will write off loans or else the same formula will work. It is cheaper to do this than to pay”.
Against this backdrop is the undeniable truth that very few farmers can undertake agricultural activities without accessing credit. This is especially so because inputs have to be bought most of the time and labour paid regularly. Often it is a matter of survival for the family till the harvest comes in. In this scenario is it any wonder that the moneylender becomes an important input into agriculture. We saw rates ranging from 5% to 20% a month.. In 2004 apparently there was no credit available even at 25% a month. With interest rates at these levels how much cash profit can the farmer expect from rain-fed, small and marginal landholding?
Farmers are turning to women's self help groups as an avenue for accessing easy credit and at much more affordable terms. Compared to the moneylenders the normal SHG rate of 2% per month makes the loan almost FREE. Accessing credit then becomes the sole purpose of forming SHGs of women! These SHGs exist only on paper and are run by men themselves. We have seen 19 SHGs groups of women in one village of less than 1000 population…. None of these were meant to mobilize and empower women. None had regular meetings though savings records and minutes were impeccable. This puts paid to the entire concept of women's empowerment that the SHGs are supposed to (and touted to) foster. The banks are slowly strangling this line of credit as well by linking default of men to women's SHGs. Genuine groups also suffer because of these policies as all of us would have seen some time or other. Families are thus pushed back into the welcoming arms of the moneylenders. In the next report we will look at women's SHGs, their economic activities and ultimate impact on lives in more detail.
Another pattern we have seen in Yavatmal is that of concentrated landholding. Few families hold most of the land, a few are small farmers and rest are landless labourers. In Bellora, a village of around 2000 souls (350 families), for instance, 75% of the land was held by 8-10 families with the remaining 25% being held by another 25-30 families and the rest being landless. There were no other livelihood opportunities in the village. Still there was no significant migration. When investigated, we realized that the actual act of farming is managed by the landless for the landed gentry. They are employed on monthly (Rs. 900 + one bag of jowar) or yearly terms (8000 + 12 bags of Jowar) basis. The landowner does nothing but supervise leaving himself free to indulge in politics or other pursuits. In reality the landless are bonded but don’t realize it. The landlords are taking care to ensure that the landless are kept at an optimum level… just enough to prevent revolt and not too much to make them independent… The landless rarely have any disposable income left to think of education or health of their children who are consequently consigned to the same fate… They drop out of school at a young age and get into the workforce. The invidious cycle is thus self-sustaining…
Is it any wonder that most farmers want their children to get out of agriculture and get JOBS?
posted by Makarand at 9:11 PM
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