Loan waver: Distressed farmers are not celebrating

The proposed debt relief measures for farmers in the Union Budget generated faint smiles across the emerald fields of Punjab, the country's traditional wheat granary holding a bumper crop this season. But the hardy Jat farmers of the state are not celebrating yet, viewing the loan waiver as a 'temporary crisis management measure' by political parties ahead of an impending election.

"Ninety per cent of farmers in Punjab are in debt and majority of them have taken loans from private sources and not banks," said Shamsher Singh, 56, a well-to-do farmer from Hari Majra village in Patiala district. Shamsher Singh should know, as he is also director of the Kheti Vikas Bank, Chandigarh. "Punjab's farmers will not benefit until the loans from 'arhtiyas' (commission agents) are not waived completely," he said.

Going by National Sample Survey Organisation's (NSSO) figures, every farmer household in India was having an average outstanding loan of Rs 1,258. In Punjab, it was the highest at Rs 41,576 (December 2003 figures). The recovery rate of institutional loan in Punjab was 85 per cent, again highest in the country, which meant the overdue loan was about 15 per cent. A bank official in Chandigarh said it was a very complex process to find out how much amount is overdue towards small and marginal farmers.

But it was said that Rs 15,219 crore was advanced by commercial banks, Rs 4,080 crore by cooperative banks and Rs 1,974 crore by Punjab Agriculture Development Bank. Thus rough estimates hinted that Punjab farmers would benefit by anything between Rs 800 crore to Rs 1,000 crore under the loan waiver scheme.

Compared to their contribution to the nation's food security, this benefit was considered far less to manage the crisis of 3.47 crore marginal and small farmers and 87 lakh other farmers in the state. The non-institutional loan was the biggest evil because of its high proportion according to some estimates 50 to 55 per cent of total agriculture loan and high rate of interest, pegged at 26 per cent annually.

Then there were other problems facing Punjab's agriculture; ground water depletion, soil erosion and environmental degradation. Farmers' organisations said this was a direct fallout of Punjab's success story since the ushering in of the green revolution. "Punjab has been contributing the largest share of wheat and rice to the Central pool for well over four decades. In the process it has suffered grossly," said Umendra Dutt of Kheti Virasat Mission (KVM), Faridkot.

Dutt said the Punjab agriculture model was a "paradigm mistake" and thousands of farmers had committed suicide as a result of deceleration of agricultural growth since the mid-1980s. The KVM had taken the Punjab farmers' cause and was involved in what it called 'dismantling the old paradigm by promoting an eco-friendly version of green revolution'.

Called Nanak Kheti, Dutt described it as a farmers' movement for ecology to change the entire food culture corrupted by the use of chemicals and practice of monoculture. Some 200 villages in 60 blocks across Punjab had joined KVM's effort, he claimed. Beginning April 2007, KVM adopted five villages in Bhatinda and Faridkot districts, aiming to change the mindset of the Punjab farmer. "To begin with, we want to dismantle the aura surrounding the Punjab Agriculture University and let every farmer know that he is an expert. He should take pride in himself and turn to natural farming. This alone can save him from suicide," said Dutt.