Indian cotton farmers look to micro credit

By Zubair Ahmed
BBC News, Vidarbha, India

The women want to help with the family finances

In India's cotton growing region of Vidarbha, where, on average, three debt-trapped farmers are committing suicide every day, a silent revolution is taking place.

This revolution is being spearheaded by 500,000 female small entrepreneurs, who are determined to reduce the debt burdens of their families.

Micro credit schemes, introduced years ago in the region, are making an impact, slowly but steadily.

Shobha Gajbe in Vidarbha's Keslapur village belongs to the socially oppressed and poverty-stricken community called Dalit or lower caste Hindu.

"We were heavily in debt," she says. "Micro credit helped us pay back most of the old debts."

Shobha is part of a group of 12 women that has been financed by a micro credit bank.

From her share Shobha has started a small business of cooking midday meals for school children.

She is happy.

Farmers' suicide

Harvest marks the season of hope in Vidarbha.

The government's policies are responsible for suicides Maya Wankhade

The farmers' labour comes to fruition towards the end of the year, when rows upon rows of cotton-laden carts and trucks are queuing up outside rural markets to sell the produce.

But often such hope is fast turning to despair as farmers' demands for higher procurement prices are rejected by the government.

Lower prices mean they cannot pay back their debts, and as the New Year takes hold reality hits home.

"Unfortunately", says activist Kishor Tiwari, "that also means the rate of the farmers' suicide cases may also go up".

Forming a group

But all may not be lost for the region's 3.2 million cotton growers.

Vidarbha's farmers are struggling to make a living

Dozens of government and private micro credit schemes are running smoothly in the region.

Take for instance Yavatmal, the region's poorest but most fertile district.

Thousands of women here have become members of micro credit schemes.

They are running small businesses and they are saving too.

But how do the schemes work?

Ten to 12 village women get together and form a group, which then approaches a bank for credit.

The micro credit banks urges them to save with them, with each member depositing money, ranging from 50 rupees to 1,000 rupees every month.

The bank in turn provides credit to the group, whose members borrow money from the group depending on their needs.

Of course there are as many bad schemes as there are good ones.

Farmers have to be careful while choosing a scheme or credit finance company.

Empowered women

Hemlata Dande and her group of 12 women chose the one that gave them 120,000 rupees to collectively start a video parlour in Vidarbha's Mathni village.

The women's professionalism has impressed the bank

Thanks to their entrepreneurial spirit, they added another business to it - a public call office or PCO.

Barely a few months after borrowing such a big amount, the group had paid half of it back to the bank.

This has given them a great deal of confidence.

"Earlier we used to run after [the bank], now they're after us," says Hemlata.

True, the bank has now offered the group a substantial sum to buy a harvester.

Sanjay Sangekar, a senior official of the confederation of all micro credit institutions, says the whole idea is to empower rural women.

"The women of Vidarbha have become more confident; there is more general awareness among them and above all they are financially independent enough not to always rely on their husbands," he says.

Women helping their families financially could help prevent some farmers from committing suicide, he believes.

Making money from making food could save lives

But Maya Wankhade, who has helped hundreds of women become members of micro credit schemes in the tribal district of Yavatmal, does not think the schemes alone will contain suicide cases.

"The government's policies are responsible for suicides," she says.

"The farmers wait in the markets for weeks before the government procures their produce. This makes it difficult for them to pay back their debts."

The farmers did indeed bring their produce into the markets in December.

But haggling over price fixing led to unrest.

One farmer died recently when police fired at farmers who had gathered to protest against the government's refusal to increase the procurement prices.

Making matters worse, the government, under the proposed World Trade Organization agreement, has stopped being the official procurer of cotton.

In the new, free market regime, the farmers feel more vulnerable.

And for many, the only hope of breaking free from the cycle of debt appear to be the savings put aside by the women entrepreneurs.