“Banks should ensure that the amount is given to farmers only. Banks need to play a crucial role. Otherwise, it happens that the money is taken from the government but never reaches the farmers. We hope that all sugar mills will implement this decision in the larger interest of the farmer community."
December 04, 2015
INDIA: Soft loans for sugar barons, suicide for farmers
[This is an AHRC Article.
Also published in Countercurrents.]
By 30 June 2015, 1300 farmers had killed themselves in Maharashtra, according to the state government’s own admission, with half of the year still to go. The ongoing drought in Marathwada was supposed to deepen the crisis, which it did, with the toll reaching 997 there alone by 30 November 2015. The total number of suicides in the state has crossed 2400, as against 1981 suicides it admitted in 2014.
The government further concedes that many of these are ‘eligible’ farm suicides: the land was in the victim's name and there was evidence of indebtedness, which makes them ‘eligible’ for compensation. Even overlooking the fact that these criteria oust women and landless labourers squarely from even a possibility of getting considered ‘eligible’, the numbers are significant. According to the Maharashtra government, 722 out of the 1300 farm suicides by June 30 were ‘eligible’ suicides. Revenue officials also admitted to 626 out of 997 farmers’ suicides in Marathwada being ‘eligible’. That the government has yet to provide the compensation is another matter altogether.
The government is not always slow in dealing with distress however, as seen in the case of the sugar mill owners. These poor guys owed some Rs 2,532.49 crore to the Maharashtra sugar cane farmers, many of whom figure in the suicides statistics, whose sugarcanes they bought and did not pay for. They could not, as Union Minister for Consumer Affairs, Food and Public Distribution (hereafter Food Minister) Ram Vilas Paswan told the Lok Sabha in February, due to the falling sugar prices. "The outstanding sugarcane dues are mainly on account of low realisation from sale of sugar," he had said in a written reply to a question. That not a single sugar mill owner has reportedly committed suicide, unlike thousands of farmers, is beside the point.
Well aware of the crisis and its impact on farmers, the Union Government approved a Rs. 6,000 crore interest-free loan to sugar mills to enable them to clear cane arrears payable to farmers in June 2015. The gazette notification for the same was issued by the Department of Food and Public Distribution and can be accessed here.
This was, interestingly, not the first such package for sugar mill owners to bail out farmers—the incumbent union government had given interest free loans of Rs. 4,400 crore to the sugar industry for paying cane arrears in June 2014 as well, soon after coming to power after the general elections in May 2014. The previous government had also approved an interest free loan of Rs. 6,600 crore for the mills for clearing sugarcane arrears.
Unfortunately, going by the government’s own data, not much of the money seems to have reached the farmers. The total payments sugar mills owed to the farmers in June 2014 was pegged at 11,000 crore. The amount, as per Food Minister Paswan’s own admission, rose to Rs 16,364 crore by February 2015, and to a whopping Rs 21,000 crore by April. Out of these arrears, Uttar Pradesh sugar mills owed the farmers the maximum at Rs 7,870.57 crore, followed by Maharashtra at Rs 2,532.49 crore, and Karnataka at Rs 2,154.97.
The government, of course, makes the claim that the money owed by the sugar mills have come significantly down to Rs 12,248 crore at the end of the 2014-15 season. Have a cursory look at the figures and the lie gets busted. The arrears that stood at Rs. 11,000 crore at the end of 2013-14 season reached to Rs. 12,248 crore at the end of the 2014-15. That is a clear increase of Rs. 1248 crore, not a ‘reduction’, significant or otherwise because of whatever relief measures the government claims to have pressed in service.
Where did all the money given to the sugar mills to pay the farmers go, then? The answer to this is far from clear, though one possibility is it having been used to keep the sugar mills afloat, most of them privately owned with a very small number being under cooperatives. The presence of leakages is admitted by officials themselves. A senior government official from the co-operative and marketing department of Maharashtra, quoted in this media report, admits the same-
Even if some of the funds made it to the farmers, this would not change their predicament as they would need to spend the money on expenditures warranted from the last year as well; such as daily needs, education, health care and other social responsibilities.
Such soft loans to sugar mills therefore cannot effectively address the crisis of the farmers, a crisis they have to deal with day in and day out. While sugar mill owners can wait for government bailouts, ordinary farmers do not have this luxury, a fact that keeps surfacing in farm suicide statistics. Furthermore, many of the private defaulters do not have their businesses confined to the sugar industry alone; they have diverse portfolios that include huge profit making businesses, some even based on the byproducts of the sugarcane crushing, such as ethanol refineries.
Why then, do governments keep bailing out the industrialists and not the farmers? The answer is simple: industrialists are indispensable to the system that masquerades as democracy in India, while farmers—divided over a hundred fault lines—are not. The industrialists fund political parties and their electoral campaigns, farmers cannot. Further, helping ‘industry’ goes well with the dominant ‘growth and development’ discourse propagated by powers across the world, whereas helping farmers comes under ‘subsidies’ that need to be done away with.
Sadly, with so many farm suicides, this state of affairs cannot continue without having serious consequences to both the society and the republic. And the republic cannot solve the farm crisis by bailing out sugar barons. It needs to come up with something that addresses the real problems ailing both the farmers and the industry. Keeping mills afloat with public money, and making farmers continue to grow sugarcane with diminishing to no returns, resulting in farm suicides, is not a solution to the problem.