Posted online: Sep 03, 2009 at 2242 hrs
FazilkaWall Street is not the only place burdened with toxic debt. Punjab farmers suffer from the malaise too. The state has the highest per capita farm indebtedness in the country, leading to a spate of suicides in the region.
Ironically, a major cause of indebtedness is the race among even small and marginal farmers to own tractors and farming equipment, since this is a major status symbol for Punjabis. According to the Annual Budget of Punjab for 2009-10, rural debt is estimated to be Rs 35, 000 crore. This comprises Rs 22,000 crore as institutional debt, and Rs 13,000 crore of debt towards money lenders and arhtiyas. The per-farm household debt stands at Rs. 41,576—the highest in the country, against the all-India average of Rs 12,585.
The work done by a progressive farmer in Punjab to provide solutions for rural debt has yielded admirable results, through his Zamindara Farmsolutions Private Limited in Fazilka, started in 2004. Ahuja was recently awarded by the state government for developing a blended-value business model, with which he helps farmers to come out of the debt trap.
Ahuja's rationale is simple. Those who want to read good books regularly don't buy the whole library—they simply become members. Ahuja too developed a tractor-and-equipment bank, which rents out top-of-the-line, latest equipment to farmers. Instead of making heavy investment in such equipment, poor and marginal farmers take tractors and equipment from this bank whenever required.
Talking to FE, Ahuja said that he now tries to convince farmers to pay for use, rather than pay for ownership. "Punjab has an unenviable figure of approximately Rs 10,000 crore debt in the agriculture sector, due to high spending on farm machinery. A tractor is economically viable only if it runs 1,000 hours in a year, but it is used for only 250-300 hours in a year. Statistics show that there are 4. 30 lakh tractors in the state, while the requirement is for only about one lakh tractors. Due to this unnecessary indulgence, excessive money has been blocked, and the yearly interest burden on this alone is to the tune of Rs 900 crore," avers Ahuja.
Taking farming equipment on rent is a major money saver for farmers. The company has 6,300 users in Punjab , Haryana, Rajasthan and Uttar Pradesh. More importantly, Zamindara Farmsolutions has helped 500 farmers out of the debt trap. With eight centres in the state, the company now plans to help 5,000 such farmers.
Ahuja informs that there are around 15 lakh families in the state, which cultivate 10 million acres of land. Around 70% of the farming area are covered by wheat and paddy crop. The average landholding of 93% farm families is of 2 hectares only. As a result, the tractors and other farming equipment are grossly underutilized.Adds Anu Nagpal, director Zamindara Farmsolutions, "If a farmer buys the machinery, his costs turn out to be Rs 700 per hour. But if he takes all the equipment on rent, his cost comes to only Rs 130-140 per hour – a saving of 70%."