Agri Business

Covid-19: Farmers turn to illegal money-lenders for support

Radheshyam Jadhav Pune | Updated on May 18, 2020

Distressed Maharashtra farmers are knocking on the doors of private money-lenders to overcome financial crisis following the Covid-19 lockdown.

“As the Covid-19 situation is worsening, farmers are bearing the brunt. Since March, many farmers are already facing a cash crunch due to lockdown and closure of APMCs. It is not only about cultivation but also about fulfilling daily needs,” said agriculture expert Nishikant Bhalerao. He added that the network of illegal money-lenders spread across the State has become active.

Aurangabad-based farmer Kaka Thote admits that the majority of farmers in the region are lining up at doorsteps of private money-lenders. The noose of private money-lenders around the neck of farmers would tighten, he says.

Known as farmer suicide zones, the Marathwada and Vidarbha regions of the State have a strong parallel illegal credit system where thousands of money-lenders provide loans to farmers charging excessive interest rates. There is no record or registration of this informal credit system. “With the spread of the virus, this network of illegal money-lenders will also spread,” said Thote. He added that many farmers in Aurangabad had to destroy their mosambi yield as there was no demand in the market.

Loan disbursal

The State allows licensed money-lenders to provide loans to individuals. As per the provisional government data, 12,754 licensed money lenders in Maharashtra provided a loan of ₹1,237.4 crore in 2019 to 6,49, 537 loanees. But the number of illegal money-lenders is much more than the registered money-lenders, say farmers.

Sunil Kamble, an activist in Osmanabad, said that small and marginal farmers don’t get support from the financial institutions and Covid-19 has changed the equations on the ground. “Farmers are amidst a major crisis. The agriculture cycle has collapsed and farmers are in distress,” he said adding that private credit providers exploit farmers in all possible ways.

During 2019-20 up to December, crop loan of ₹24,897 crore was disbursed through financial institutions as against ₹31,283 crore during 2018-19. During 2019-20 up to September, agricultural term loans of ₹18,147 crore were disbursed as against ₹36,631 crore during 2018-19, according to the government data.

During 2018-19, Primary Agricultural Credit Co-operative Societies (PACS) disbursed loans of ₹12,010 crore to farmers.

Former MP and Swabhimani Shetkari Sanghatana leader Raju Shetti said: “Farmers have to sell their produce at a meagre price as markets are closed and the dairy business is disturbed because of the break in milk collection cycle by cooperative dairies. Private money-lenders will reap the benefit of the situation,” he said. Shetti added that microfinance companies are coercively recovering loan interests and installments from farmers.

As per Population Census 2011, there are 4.94 crore workers in the State. The percentage of workers working in the agriculture and allied activities sector is 46.1 per cent.

Published on May 18, 2020

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