Microfinance Also Kills
By Devinder Sharma
10 March, 2010
Devinder Sharma Blog
My colleague from Hyderabad, Dr G V Ramanjaneyulu, has sent me this case study from a report prepared by the Centre for Sustainable Agriculture (CSA) on farmer suicides. It makes for shocking reading, especially to know how the modern Shahukars, no different from the dreaded and despised moneylenders of yesteryears, scoop down to extract their pound of flesh.
I am aghast to read that in this particular case, the MFIs had descended to collect the EMI while the dead body of the farmer lay in the courtyard. This is not an exceptional case. You get to hear similar stories everywhere.
You can read the concerned section on microfinance in the report below. Please overlook the grammatical errors. Probably this has been translated from Telgu:
10.30 PM on November 5th, 2009 was a nightmare to Rajamma and her two sons. Bojanna, a 35-year old farmer, was a resident of Losra village and mandal in Adilabad district was committed suicide by consuming poison.
Bojanna survived with wife and two sons, Elder son Gangaprasad is studying intermediate second year in a Private college in same village and his second son Prashanth is studying 7th class in a Govt.school.
He owned 5 acres which has no irrigation source. Apart from this, Bojanna leased in 7 acres from villager at the cost of Rs.1500 per acre per year. He cultivated Cotton in 11 acres, and Paddy in one acres .After first picking he was completely upset as he could able to reap only 7Q from 11 acres. Previous year he had had harvested only 3Q from 11 acres, which is much worse than present year.
He possesses two milch animals, which is the other source of income, and a pair of draught animals, which were used to plough their own land. Rajamma, the widow of Bojanna, also earn Rs.40-50 per a day by beedis making/rolling.
He had borrowed money from microfinance institutes viz.,Spandana, Basix and Swayamkrushi, and also private money lenders. Now his family has to pay Rs.3.5 lakh to microfinance institutes and money lenders at an interest rate of 24 percent per annum.
These microfinance institutes are very particular in collection. It is inhuman part of one of the microfinance institute that they have collected EMI when Bojanna’s dead body laying in front of his home on day he had committed suicide.
The borrowed amount was invested on Agri-inputs purchase viz., Cotton seed (18 packets @ rs. 750 per packet). Pesticides (4 sprays @ Rs.11000 per spray), Synthetic fertilizers (Rs.10000) and on weeding (Rs.20000). Thus, the total cost of cultivation was Rs.87, 500.
All the inputs purchased on credit from local dealer and as an understanding the harvest has to sell to the “all in one dealer”. From 7Q of cotton he could able repay only Rs.18900. “There is no scope for further harvest” said Rajamma.
Raja Reddy was a member in Rythu Mitra Group. He had no extension contact and did not receive subsidy on any agricultural inputs. All the crop inputs were brought from a private shop on credit at interest rate. He did not receive any training and had no awareness on organic farming. He was a social drinker.
According to his in-law, he committed suicide, because he felt guilty for not repaying the debts. High investment on the crops, house construction, continuous crop failure due to climatic vagaries for the past 3 years were the reasons for his death.
