Global Policy Forum

From Debt to Death


By Parvathi Menon

Frontline (India)
September 27 - October 10, 2003

Crop losses caused by three successive years of inadequate rainfall and the diminishing presence of institutional credit force a large number of Karnataka farmers into the debt trap. Some of them choose death as a way out.

Sanna Hanumanthappa, a young man of 30 from Aalur village in Davangere taluk, lies on a hospital bed at the Chigateri Government Hospital in Davangere, wafting in and out of consciousness. He was admitted on September 16 with serious pesticidal poisoning. His doctors say he is out of danger, but Hanumanthappa is still in a semi-conscious state, sometimes rambling incoherently. His wife, father and brother are in attendance, anxiously awaiting his recovery. Apart from the family, there is also a quietly threatening presence on 24-hour duty at Hanumanthappa's bedside - a person who is not a relative; nor is he from the same village. He appears to be the agent of the moneylender to whom the family is in debt. He monitors the patient's condition, presumably helps out with money, and ensures that the family does not divulge to prying journalists the details of what had actually happened.

Hanumanthappa and his family own one and a quarter acre of borewell-irrigated land. The pressing need for money led them to mortgage the land for Rs.80,000 to a moneylender at the APMC (Agricultural Produce Marketing Corporation) yard in Davangere. Recently, on making routine enquiries about their loan, they learnt to their shock that their land had been sold. Following a heated argument with his creditor, an angry Hanumanthappa drank a bottle of pesticide in front of the moneylender's shop, in full public view. Timely medical intervention saved his life. But even as he struggles to recover, the tentacles of the moneylender sink ever deeper into the fabric of his life.

Indebtedness, a huge and growing burden in the rural countryside, particularly amongst poor farmers, is the single most conspicuous reason for the mounting number of suicides in the state of Karnataka. Over 275 farmers have taken their lives between April 1 and September 19 this year in the State. While there may be a variety of triggers that push individuals to take this drastic step, indebtedness is the common thread that links them all. Further, in all these cases, the indebtedness of the farmer is preponderantly tied to informal sources of credit, and not to institutional credit structures like banks and cooperative credit societies.

The diminishing presence of institutional credit in agriculture is only one reason for increasing indebtedness. It has been accentuated by three years of inadequate rainfall and consequent crop losses. Even irrigated tracts are experiencing scarcities. The Indian government may be celebrating its triumph in Cancun, but the negative impact of globalisation on agriculture through the World Trade Organisation regime has already compounded the agrarian crisis brought on by drought. Several agricultural commodities have seen a fall in prices in the last three years owing to imports. The lifting of agricultural and power subsidies have pushed up the cost of cultivation substantially, and the withdrawal of safety nets like a universal public distribution system for food has increased expenditures for poor families. Revised estimates for the category of Below Poverty Line families have excluded a large segment of the poor from subsidised food.

The burden of irredeemable debt has eroded the living standards of those who are already poor, throwing them to the mercy of moneylenders, and depriving them of their dignity and standing in rural society. The more vulnerable commit suicide. "The noose is already around the neck of the farmer." This comment thrown from a crowd collected at the house of Shankare Gowda, a 32-year old farmer who committed suicide at Arechakanahalli village in Mandya district, sums up the predicament.

The phenomenon of suicides amongst farmers in Karnataka has been a recurrent theme in the agricultural sector since 1998. The sudden and alarming spurt in suicides since April this year, however, appears to indicate a new trend and pattern. Farmers' suicides are no longer a feature of drought-prone and economically backward districts, nor do they only occur in pockets of high investment agriculture, like cotton growing tracts.

The suicide phenomenon has spread to all regions, including to relatively more advanced and prosperous agricultural belts. Thus, while 30 suicides took place between April 1 and September 12 in drought-prone Davangere, the highest figure recorded amongst the districts, 22 suicides took place in Mandya, the State's sugar bowl and heartland of the Cauvery irrigation network in the same period. Eighteen suicides occurred in Shimoga, a paddy-growing district of high rainfall. Fourteen farmers ended their lives in Haveri district, a district of normally assured rainfall.

The pressure from moneylenders to repay loans appears to drive farmers, particularly the small and marginal farmers, to take their own lives. Loans from institutional lending sources typically account for just around 10 per cent of a small farmer's credit needs and there appears to be little evidence of banks forcing their creditors to repay their loans, a fact that the recovery performance data of banks over the last three years attest to. For example, in Haveri district, the recovery percentage of loans to agriculture by banks were 49 per cent, 44 per cent and 47 per cent for 2002, 2001 and 2000 respectively. "All banks have rephased their loan and interest structures," said Chandrashekhar B. Yallur, Lead District Manager of the Vijaya Bank in Haveri. "But our disbursements are coming down as farmers are unable to repay loans because this is the third year of crop failure," he told Frontline.

It is quite a different story when it comes to credit from informal sources. Interest rates to moneylenders range from 30 to 50 per cent a year, and go up to 60 per cent for short-term loans. Loans from moneylenders are usually repaid, at least in part, after the harvest. This being the third successive year of poor crops in most districts, the customary post-harvest repayments could not be made.

Coercion by the moneylender rarely takes the form of physical assault, but the pressure never lets up, and involves considerable loss of face and self-esteem for the debtor. "The moneylenders used to come together like elephants, 10 or 15 of them, and harass him," said Ratnamma, wife of Puttaswami Gowda, a farmer from Bidirahalli village in Mandya district. He committed suicide on September 9. He owned 2.5 acres of land and owed Rs.50,000 to private moneylenders. Shankare Gowda of Arechakanahalli village of Maddur taluk in Mandya, and Channamma, a 68-year old widow from Valagerehalli village in the same taluk, committed suicide around the same time as Puttaswami Gowda. Shankare Gowda was in debt to private moneylenders for Rs.70,000. Channamma owed the Seva Sahakara Sangha Cooperative Bank just Rs.8,000 while she owed a moneylender Rs.43,000. Their relatives confirm the humiliation they endured from moneylenders and their agents. For all the bitterness they feel, the family of a suicide victim will never divulge the identity of the moneylender, usually a large landlord, to outsiders. There are generally no written agreements between debtor and creditor which makes it difficult to punish those who practice usury. In Haveri and Davangere districts the standard interest rate charged by a moneylender is around 50 per cent a year.

Mandya district provides a good example of the rise of agrarian distress within what is popularly believed to be a region of relative agrarian prosperity, and contrasts sharply with conditions in Haveri district which is a transitional belt between the drought-prone tract of northern central Karnataka and the high rainfall coastal belt of the State. Mandya district has the highest net area irrigated to net area sown (43.8 per cent) in the State, while Haveri has no surface irrigation. Though in a belt of assured rainfall, this district has experienced rainfall shortages over the last three years.

In Mandya there have been a spate of suicides this year with a cluster occurring in Maddur taluk which falls in the constituency of S.M. Krishna, the Chief Minister of the State. In this district, releases into the Cauvery canal system have been inadequate over the last three years owing to the low storage level in the Cauvery basin dams, the result of poor monsoons over this period. Several farmers have had to dig borewells on their lands, for which they have taken loans. There has been a fall in the prices of sugar. "The price at which sugar factories are buying cane has fallen from Rs.1,500 per quintal in 1992 to Rs.1,150 per quintal," V. Ashok, State secretary of the Karnataka Rajya Raitha Sangha, told Frontline. "The government is now importing sugar at a landed price of Rs.900 per quintal which is less than our cost of production. Factories are not lifting stocks, nor have they released the money for stocks already bought. The cost of paddy has fallen from Rs.700 to Rs.500 this season," he said.

With the partial lifting of power subsidies, the electricity bill for farmers with pumpsets has risen substantially. The small farmer is often presented with an ultimatum from the power distribution company to pay his arrears or have his electricity connection cut. Shankare Gowda from Arechakanahalli village in Maddur taluk was presented with a bill of Rs.48,000 for his power arrears. With the interest waived he still had to pay Rs.31,000 and pawned his wife's jewellery to repay. This added to his overall debt burden, which led him to commit suicide three months later.

Agthathota Appayappa, a 60-year old farmer and his wife, 55-year old Muniyamma, from Nakkaladinna village in Srinivaspur taluk of Kolar district, had planted tomatoes on three acres of land, which was irrigated by a borewell. When the transformer that supplied power to the village pumpsets burnt he went to the BESCOM office to ask that it be repaired. He was told that around 25 farmers whose pumpsets the transformer supplied power to owed the company Rs.40,000. Unless he could persuade them to pay up, the transformer would not be repaired. Appayappa was both unwilling and unable to do so. His tomato crop withered and he was unable to repay his debts. Frustration drove both Appayappa and Muniyamma to attempt suicide by drinking poison. While Muniyamma died, Appayappa survived and is recovering in hospital.

Haveri district has received only 40 per cent of its expected rainfall this year. Its main crops are maize (grown on around 80,000 hectares in the Kharif season), paddy (grown on 38,000 hectares), followed by green gram and chillies. With good showers in the months of June and July, farmers sowed paddy. A long dry spell followed which spelled disaster for the crop. Farmers then uprooted the drying paddy crop and sowed maize. This too has not done well. "If only we had a good crop we could have returned at least a part of our debt to the moneylender," said Shekappa Thondur from Bada village in Shiggaon taluk of Haveri district. His 24-year-old son, Karabasappa Shekappa Thondur, committed suicide on September 18 unable to face the consequences of consecutive crop failures and mounting debts. "This year we tried rice, maize and green gram, but everything dried up."

In Haveri district 98,000 farmers paid premiums prior to this kharif season for a crop insurance scheme launched jointly by the State government and the General Insurance Company. Insurance settlements totaling Rs.89 crores for the 2002-2003 kharif season have been held up by the insurance company on the ground that a large number of the claims are false. These disbursements would have provided some relief to farmers. "We borrowed to pay our premiums, and we have got nothing despite the failure of our crops", said Shambu Byadgi, a small farmer from Devihosur village in Shiggaon taluk of Haveri.

There is as yet no effective official strategy in place to stop the rising suicide graph, nor indeed does there appear to be a targeted strategy that could address the larger crisis in the agrarian sector. Karnataka, the country's celebrated leader in information technology has a serious social crisis waiting in the wings.

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FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.