ADB says rural loan may help stem farmer suicides
Posted by Ramoo on March 16, 2007
March 15, 2007
By Unni Krishnan and Surojit Gupta
NEW DELHI (Reuters) – The Asian Development Bank hopes a $1 billion loan aimed at reforming India’s rural credit structure will help stem farmer suicides in the country, a senior official said on Thursday.
An estimated 5,000 farmers have killed themselves over six years across India’s sprawling western and southern plateau — where the black soil has long borne a rich harvest of cotton — because they could not repay loans taken for their crops.
The spate of suicides in the country’s richest state of Maharashtra has not abated despite efforts by New Delhi to ease the farmers’ financial burden.
“We are hoping in terms of outcome I hope two years from now there will be a reduced number of farmers committing suicides,” Kunio Senga, director general of the South Asia department of the bank told Reuters in an interview.
The programme, carried out in five Indian states, aims to revitalise the cooperative credit structure and reach masses of small farmers, Senga said.
Economic growth of more than 8 percent in the past three years has made millions in the cities richer, but it has bypassed the farming sector that supports more than 60 percent of India’s one billion-plus people.
Most of India’s farming community is poverty-stricken and many farmers borrow from the village moneylender at rates as high as 30-60 percent a month.
Ensuring economic growth was inclusive of poorer members of society has become increasingly important in India and the communist-backed ruling coalition has made it the centrepiece of its economic agenda.
The Congress party-led coalition, which swept to power in May 2004, has been trying to bridge the rural-urban divide and include millions of poor in the country’s largely city-based boom. “We are very much into assistance directly to address inclusiveness of growth. Our $1 billion rural finance programme is one signal that we are very much now into inclusiveness of growth,” Senga said.
He said upgrading of rural infrastructure, particularly to develop the farm sector, was key to sustaining growth and the bank was optimistic about reforms undertaken by the government to reform the sector.
The Union budget for 2007/08 has doled out gifts aimed at giving a major boost to the ailing farm sector which puts food on the tables of 115 million farming families.
Analysts say the government should focus on linking farmers to the markets through private investment in production, post-harvest infrastructure and refrigerated distribution.
“Inclusiveness requires more reforms including agricultural related and I am quite optimistic,” Senga said.