How agri credit is a source of survival for small farmers

A few years ago 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’s death, the family continues to bank on loans for fulfilling its agricultural and non-agricultural requirements. For villagers in remote Hatwanjari village in the Yavatmal district of Maharashtra, this is not something new. A 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. Loan sources, purposes The Situation Assessment of Agricultural Households and Land and Holdings of Households in Rural India, 2019 (NSS 77th round) showed, of the total loan availed by rural households having less than 0.01 hectare land, 50 per cent came from professional money lenders while 13 per cent came from scheduled commercial banks. For households having landholding between 0.01 and 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 categorised marginal farmers as those who have less than 1 hectare of land and those holding 1-2 hectares as small farmers. However, more than 86 per cent of farmers in the country are small and marginal. A majority of the marginal farmers had availed 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 and 1 hectare had availed 54 per cent of the total loans for non-agricultural purposes. Capital, revenue expenses 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, increased with an increase in landholding. Revenue expenditure incurred on account of purchase of seeds, manure, fodder, payment of wages also increased with landholding. Loans for survival Data showed that small landholding households availed loans for medical expenditure for hospitalisation, doctor’s fees, purchase of medicines, medical diagnostic tests, and other pathological tests . 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 showed that rural households are not just facing an agrarian crisis, but the struggle for survival has aggravated.