More farmers in Maharashtra are turning to private lenders for loans

The number of farmers seeking loans from licensed private lenders in Maharashtra has increased by 27% in 2021, while the loan amount has increased by 42% over the same period.

The figures highlight the reality on the ground that the reliance of small, marginal state farmers on private lenders has multiplied due to Covid-led shutdowns, market closures and rains outside season.

In 2020, over 623,000 farmers have benefited from loans worth ₹1,235 crore from licensed private lenders in Maharashtra. In 2021, more than 788,000 farmers took out loans of ₹1,755 crore from approved lenders, according to data presented in the state’s 2021-22 economic survey.

Farmers leader and former MP Raju Shetti said the number of licensed lenders is just the tip of the iceberg and a large number of illegal private lenders have tightened the noose around the necks of farmers in Maharashtra.

In addition to agricultural and non-agricultural credit societies, the state authorizes approved lenders to make loans to individuals. For this purpose, licenses are issued by the office of the Commissioner for Cooperation and Registration of Cooperative Societies. In 2020, the number of licensed lenders in Maharashtra was 12,993 while in 2021, the number was 12,001.

Loans for non-agricultural needs

The Status Assessment of Farm Households and Household Land and Farms in Rural India, 2019 (NSS 77th cycle) shows that small landholder households are to be availed of loans for medical expenses of hospitalization, doctor’s fees , the purchase of drugs, medical diagnostic tests such as CT scans, X-rays, ECG, EEG and other pathological tests .

These households also depend on loans for other consumption expenditures, including the purchase of durable household assets, clothing for household use, etc.

Fight for basic needs

Vilas Nakhate, a farmer from Beed, says small and marginal farmers have to depend on private lenders because formal institutions do not entertain them. “Failed harvests and losses due to unseasonal rains have compounded the problems of small and marginal farmers,” he said.

The agricultural census classified marginal farmers who have less than 1 hectare of land and those who hold 1 to 2 hectares are considered small farmers. Over 86% of the country’s farmers are small and marginal.

In January-December 2020, around 2,547 farmers took their own lives in Maharashtra while in January-November 2021, 2,489 farmers committed suicide.

Published on

March 22, 2022

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