A few years back when Chayatai Parkhi’s husband Ashok ended his life as he was unable to pay debt taken from banks and moneylenders, Chayatai was forced to take another loan from a moneylender to perform a series of religious rites after the cremation of her husband. Ashok had taken a loan for his daughter’s marriage and dowry. As crop failed he went into depression and ended his life. But even after Ashok ended his life due to debt, the family continues to bank on loans for fulfilling their agricultural and non- agricultural requirements.

For villagers in remote Hatwanjari village in the Yavatmal district of Maharashtra, this is not something new. The majority of small and marginal farmers in the region are completely dependent on loans, not only for agricultural purposes but to take care of school education of their kids, marriages, ceremonies, and medical emergencies.

But these small and marginal farmers in the Vidarbha region of Maharashtra are not an exception.

Loan sources and purposes

The Situation Assessment of Agricultural Households and Land and Holdings of Households in Rural India, 2019 ( NSS 77th round) shows of the total loan availed by rural households in India having less than 0.01 hectare land, 50 per cent loan has come from professional money lenders while 13 per cent has come from scheduled commercial banks. For households having landholding between 0.01 to 0.40 hectares 17 per cent loans came from professional money lenders and 34.8 per cent from scheduled commercial banks.

The agricultural census has categorized marginal farmers who have less than 1 hectare of land and those holding 1-2 hectares are considered small farmers. However, more than 86 per cent of farmers in the country are small and marginal.

The majority of the marginal farmers had availed these loans from non-institutional sources. Households having landholding of less than 0.01 hectare availed 71 per cent of the total loan from non-institutional sources and 28 per cent from institutional sources. In contrast, for households having more than 10-hectare land, 69 per cent of loans came from institutional sources.

About 93.1 per cent of the total loan availed by households holding less than 0.01-hectare land was for non-agricultural purposes. Households having 0.01 to 0.04-hectare land had availed 71 per cent of loans for non-agricultural purposes. Households holding land between 0.41 to 1 hectare had availed 54 per cent of the total loans for non-agricultural purposes.

Capital and revenue expenditure

Of the total loan availed from various institutional and non-institutional sources households holding less than 0.01-hectare land used only 2.6 per cent of the loan for capital expenditure in farm business and 42 per cent for education and medical purposes. About 13 per cent loan was used for marriages and ceremonies and 4 per cent for revenue expenditure in the farm business. The capital expenditure in the farm business, that is expenditure incurred on account of purchase of land, land rights, reclamation of land for farm business, new purchases, etc increases with an increase in landholding. Revenue expenditure incurred on account of purchase of seeds, manure, fodder, payment of wages also increases with landholding ( see the graphics).

Loans for survival

The data shows that small landholding households have to avail loans for medical expenditure for hospitalization, doctor’s fees, purchase of medicines, medical diagnostic tests like scans, X-rays, ECG, EEG, and other pathological tests constitute the expenditure on medical treatment.

These households also depend on loans for other consumption expenditures including the purchase of durable household assets, clothing for use of the household, etc.

The data shows that rural households are not just facing an agrarian crisis, but the struggle for survival has aggravated.

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