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Why Farmers in Maharashtra are Turning to Private Money Lenders for Loans?

Closure of markets, covid-led lockdowns, and unseasonal rainfalls have increased farmers' dependence on moneylenders.

Shivani Meena
Farmers are preferring private money lenders
Farmers are preferring private money lenders

The number of individuals taking loans from licensed private money lenders in Maharashtra increased by 27% in 2021, while loan amounts increased by 42% over the same year. According to farmer leaders, the majority of those requesting loans are small and marginal farmers.

The figures highlight the ground reality that the State's small and marginal farmers' reliance on private money lenders has increased as a result of Covid-led lockdowns, market restrictions, and unseasonal rainfall.

Over 6,23,000 individuals in Maharashtra received loans totaling Rs. 1,235 crore from licensed private money lenders in 2020. According to the data published in the State's Economic Survey 2021-22, approximately 7,88,000 people received Rs. 1,755 crore from licensed money lenders in 2021.

According to farmer leader and former MP Raju Shetti, the number of licensed money lenders is merely the tip of the iceberg, with a large number of illegal private money lenders tightening the noose all-around necks of farmers in Maharashtra.

Aside from agriculture and non-agricultural credit societies, the state authorizes licensed moneylenders to make private loans. The office of the Commissioner for Co-operation and Registrar Co-operative Societies provides licenses for this purpose. In Maharashtra, the number of licensed money lenders was 12,993 in 2020, and it was 12,001 in 2021.

Dependency on Loans For Non-Farming Needs

Data from the Situation Assessment of Agricultural Households and Land and Holdings of Households in Rural India, 2019 (NSS 77th round) show that small landholding households have to take out loans to cover medical expenses such as hospitalization, doctor's fees, medicine purchases, and medical diagnostic tests such as scans, X-rays, ECG, EEG, and other pathological tests.

Small and marginal farmers, according to Vilas Nakhate, a farmer from Beed, must depend on private money lenders because institutional banks refuse to lend to them. Crop failure and losses owing to unseasonal rainfall have compounded the issues faced by small and marginal farmers, he said.

Farmers with less than 1 hectare of land are classified as marginal farmers, whereas those with 1-2 hectares are classified as small farmers, according to the agricultural census. Over 86 percent of the country's farmers are small and marginal.

In Maharashtra, about 2,547 farmers committed suicide between January and December 2020, and 2,489 farmers committed suicide between January and November 2021.

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