Changing weather patterns and easy microfinance loans have pushed Maharashtra’s women farmers into a cycle of debt

For a few years, every time Sunita Uike took a loan, she promised herself that it would be her last. Each time, the weather hinders his plan.

When he borrowed ₹30,000 from a private microfinance company just before the sowing season in June last year, he was confident that he would find enough work as an agricultural laborer to pay the monthly installment of ₹1,840. But the rain delayed and Uike could not find any work for several days.

As the sole breadwinner of her family in Umri village in Maharashtra’s Wardha district, with two children and a husband, Uikey, unable to make the payments, again borrowed ₹30,000. As the farming season progressed, his hopes of being able to earn enough to pay his installments were dashed. But a month later, it rained so heavily in the region that the village and all the surrounding fields were washed away.

Around 800,000 hectares were damaged across the state. Due to severe losses from farm owners, Uike found himself once again out of work and heavily in debt. Once again, she borrowed ₹40,000 from another microfinance company, partly to pay off old loans and just survive.

Across the village, almost every woman has a number – many have taken two loans, others three. Some, like her friend, Neelima Kusre, have up to six. The loan, often, comes at high interest rates of up to 30% and with flexible repayment strategies.

men are mostly debt free

Uike, who still has a debt of ₹1,00,000, says microfinance has brought about a radical change in society – men are now debt-free and women heavily indebted. “Our people have no loans now, maybe just a crop loan from a cooperative bank, nothing more. In contrast, women have massive debt around their necks,” she says.

Microfinance, defined as collateral-free loans given by the Reserve Bank of India to low-income households earning up to ₹3,00,000 per year, according to the World Bank, by helping them access credit for their To create a “Micro Entrepreneur”. To grow business.

Nobel Peace Prize winner and social entrepreneur Muhammad Yunus is widely credited with inventing the modern version of microfinance after his experiments in rural Bangladesh in the 1970s. In 1983, he founded the Grameen Bank and the practice of microfinance was institutionalized. Yunus is said to have offered a loan of $27 (about ₹240) to artisans and farmers in rural Bangladesh who were unable to obtain loans from banks. Instead, Yunus created a model of distributing small loans to a group of borrowers who could act as co-guarantors.

In Vidarbha, the epicenter of India’s agrarian crisis where thousands of farmers have been committing suicide over the past two decades, changing weather patterns and easy access to microfinance loans are creating a new crisis: pushing women farmers into an endless spiral of debt and despair. Has been Data from Microfinance Institutions Network (MFIN), an industry association, shows that the number of microfinance loans in Maharashtra increased from 82.89 lakh as on March 31, 2021 to 91.66 lakh as on March 31, 2022.

While thousands of mostly male farmers have been reported to commit suicide annually in the region, local activists suspect that unsustainable debts may also be pushing some women over the edge. But government statistics are unlikely to reflect this as farmers’ deaths by suicide are not segregated by gender, says the Maharashtra government’s revenue and forest department in response to an RTI query.

The crisis is not confined to Maharashtra. The agrarian state of Punjab has also reported its women being burdened with endless cycles of microfinance loans. As on September 30, 2020, the number of women borrowers in Punjab stood at 12.88 lakh with an outstanding principal amount of Rs 4,387 crore, according to an MFIN statement.

In Tamil Nadu, a survey conducted by the All India Federation of Democratic Women in December 2021 revealed that women were increasingly turning to microfinance loans and were suffering abuse and mistreatment at the hands of loan agents when unable to repay.

Loan for marriage, house expenses, school fees…

When she borrowed the money, Uike told the lending company that she was going to buy goats. In fact, “women take loans for home, for farming, for daily expenses, for weddings at home, for the education of their children, for the education of their children”, Madhuri Khadse, head of Prerna Gram Vikas Sanstha Says, which is a not for profit based organization. In neighboring Yavatmal district, women are working on farmers’ issues.

In Yavatmal, Savita Bhiwalkar, 35, an anganwadi worker, earns ₹2,200 a month. But his installments on two loans taken for ₹80,000 each add up to ₹4,700 every month. To meet the deficit, Bhiwalkar works as a laborer in the fields of villagers for ₹150 a day. But most of last year’s was washed away due to a weather disturbance. Bhiwalkar says, “It has been a very difficult year. “In a season, there is a limited window of work for farm laborers like me. But when there is more rain and flooding, that window shrinks as well.”

However, Alok Mishra, CEO and director, MFIN, says that multiple loans are not a sign of rising debt. “RBI’s indebtedness limit also ensures that the total annual loan repayment does not exceed 50% of their annual income. So, even if they have multiple loans, the total repayment cannot exceed 50% and ensure that they are not indebted,” he says.

Mishra’s words do not come true on the ground. Thanks to the way the loans are structured and the strategy employed to recover them, skipping repayment is not an option.

Loans are given to individuals within a self-formed group of 5-10 women – friends, family members, neighbours. Installments can be weekly, fortnightly, or monthly, and collections occur with loan agents meeting with the group on the due date.

“When one member doesn’t pay, the loan agent pressures everyone else in the group to ask him to pay and if that member can’t, they reduce his contribution,” says Uike. Are. For many women, not being able to repay an installment means facing abusive microfinance executives, along with potential social condemnation and anger.

“Agents come to your house, they insult you, abuse you, even if you have delayed the installment by a few hours,” she says.

no fixed wages

Her closest friend, Maya Siram, 37, has faced the ordeal several times. Once, Siram, who has more than four outstanding loans of ₹1,20,000, missed her installment because she was ill. When the agent came home to demand the installment and answers, Siram explained his position. As a daily wage worker with no fixed pay, sick days mean no income. Her husband also works as a daily wage laborer.

“I told him, we don’t have money to eat, leave alone to repay the loan. But he refused to leave my house,” she says. “Finally, I asked him, ‘Should I kill myself? Would that satisfy you?’ He heard this and left.

Siram was not so lucky the next time, however. Farming work had dried up in the village. On Saturday morning, when her installment of ₹970 was due, Siram left for the nearby town of Arvi in ​​search of work in a last-minute desperation. When she reached the town, her phone started ringing incessantly – the loan agent was in her village, looking for her. She tried to buy time, still roaming the market, asking for a job. But the calls continued. “The agent went to my house and called me to say he would not move until I paid my instalment,” she says.

Seram got frustrated. The phone didn’t stop ringing. She realized there was only one way to end her misery – she pawned her phone for ₹3,000 and asked the shopkeeper to transfer ₹970 directly to the agent at her home, so that he could leave. After repaying her loan, when she went back to collect her phone a month later, the shop owner charged her ₹300, or 10%, as interest.

growing crisis

According to news reports, in states like Punjab, rising farm distress and indebtedness have driven women borrowers to take their own lives. In neighboring Sri Lanka, microfinance loans have caused widespread uproar, with many borrowers committing suicide, and political parties pledging to ban this type of loan. In 2010, over 200 people in Andhra Pradesh, heavily in debt for microfinance loans, committed suicide after being harassed by debt collectors.

disaster insurance

In India, the Reserve Bank of India last year issued regulatory directions for the microfinance industry and removed the cap on interest rates, but Microfinance companies asked not to charge borrowers “extortionate” interest rates, Yogesh Dayal, RBI’s Chief General Manager in the Department of Communications, did not respond to a message and an email sent to him.

MFIN’s Mishra says the industry is aware of the constraints it is facing in repaying loans due to weather vagaries. “To deal with this, MFIN has already operationalized a national calamity insurance, the full rollout of which will be done after regulatory approval. Such insurance would mean that if there is a flood or excessive rainfall certified by remote sensing data measurement breaks the pre-determined limit, the insurance will take care of at least three to four repayments for the borrowers,” says Mishra.

By then, Uike, who was eager to cultivate her one acre, promised herself once again that she would not borrow any more.

The author is a Mumbai-based freelance journalist, and author of a forthcoming book on Hindu nationalism.