Bishops say microcredit can save dying farmers

from Reuters India

By Krittivas Mukherjee

MUMBAI (Reuters) - Bishops and priests from India's biggest Catholic charity are formulating a microcredit plan for farmers whose mounting crop debts have led thousands of them to commit suicide.

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 highly publicised efforts by New Delhi to ease the farmers' financial burden.

Now, an organisation of Catholic bishops, priests and church officials has brought together experts, NGOs and farmers' groups for a two-day meeting which started on Tuesday, in a bid to devise a plan to stop the suicides.

"It's not about how much money is being spent for farmers' relief," said Father Varghese Mattamana, executive director of Caritas India, the country's biggest church-run charity.

"It's about getting the plan right."

Microcredit, the granting of tiny loans to the poor, has emerged as a valuable tool to help rural communities around world, and one of its champions, Bangladesh's Muhammad Yunus won the Nobel Peace Prize last year.

The aim of Caritas India is to replicate and adapt its own programme from Kerala which it says stopped a spate of suicides among farmers there.

The group plans to spend about $60 million over three years to implement its plan in Maharashtra, Mattamana told Reuters.

Economic growth of about 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 -- often amounts that would only buy a few drinks in an upmarket London or New York pub -- from the village moneylender at rates as high as 10 percent a month.

India's economic reforms have added to farmers' woes, with duties that protected them from subsidised European and American cotton being phased out, experts say.

Their debts soar when crops fail due to poor rains or prices tumble.

In July, Prime Minister Manmohan Singh announced over $400 million in one-time grants, interest waivers and debt restructuring besides a one-year moratorium on loan repayments for farmers.

But activists say the package had failed make an impact, and farmers in Maharashtra's worst-hit Vidharba region were still killing themselves at the rate of three every day.

"Save farmers, save India - that's our motto because most of India still depends on agriculture," said Father Frederic Dezusa, assistant director of Caritas India, said.

Officials say many farmers have only themselves to blame, borrowing unwisely to fund lavish spending or to pay for weddings. But analysts say the government should be doing more to provide credit at cheaper rates.

"The main thrust of our programme will be to provide relief through micro-credit," said Mattamana.

"The government-provided credit hasn't worked. But we are hopeful with God's grace our intervention programme will work."