Covid-19: How ‘participatory credit’ system has helped farmers tide through crisis

Radheshyam Jadhav Pune | Updated on June 23, 2020


Covid-19 has added to the woes of farmers in the drought-prone Marathwada region of Maharashtra. Nature deprived them of a good kharif season last year and they couldn’t take their rabi produce to the market due to the lockdown. Farmers are struggling to get bank loans to buy seeds and fertilisers for this kharif season as many are in the defaulters’ list. But the story of farmers’ groups in Beed and Osmanabad districts stands out in the backdrop of the ongoing crisis.

About 126 farmers’ groups comprising 1,270 small and marginal farmers’ families have received loans worth ₹1.50 crore from Manavlok, a voluntary organisation, to buy seeds and fertilisers at 0 per cent interest and without any guarantee. But will these farmers return the loan amount or demand a loan waiver citing the crisis?

“No. There will be no defaulters and there will be no demand for a loan waiver,” Aniket Lohiya, secretary of Manavlok, says with confidence. “We have been doing this exercise for the last 30 years and our experience is that farmers never fail to repay loans until and unless they are in deep trouble. We don’t have any recovery agents but we achieved 100 per cent recovery all these years,” says Lohiya.

Participatory credit system


This participatory credit system was invented when veteran socialist, the late Dwarkadas Lohiya, realised in the 1980s that socio-political change was not possible without economic change in rural areas.

Farmers in Beed responded to the idea. Krushak Panchayats were formed in villages to establish a participatory credit system. As donations started flowing in a revolving corpus was established to provide loans to small and marginal farmers. Farmers also established Baliraja Cooperative Society with a share value of ₹50 per share. Farmers purchase seeds and fertilisers from the society, which has an annual turnover of about ₹6 crore.

“The entire system runs on faith. Farmers who are unable to pay because of natural disasters or crop failures repay the amount immediately when they earn. The farmers’ groups guarantee each other while taking a loan. Even when the government announced loan waiver schemes in the past, our farmers have never come up with this demand,” said Aniket Lohiya. He added that farmers are aware that this is the money donated by society and that they must not shatter the faith of donors.

This year, 645 loan-beneficiary families are women-run households. Along with loans for seeds and fertilisers, Manavlok provides interest-free loans for drip irrigation and sprinkler systems.

Even though Covid-19 has hit the agriculture sector hard, farmers who are part of this participatory credit system have been able to sustain themselves during the crisis. With the timely availability of loans and fertilisers, they hope for a better harvest this season.

Published on June 23, 2020

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