As COVID funeral pyres burn, gloom gathers over India’s rural economy

A farmer feeds his buffalo iceberg lettuce during a 21-day nationwide lockdown to slow the spread of coronavirus disease (COVID-19) in the village of Bhuinj, Satara District, western Maharashtra state, India, on April 1, 2020. REUTERS / Rajendra Jadhav / File Photo

Satara, INDIA, June 18 (Reuters) – After Indian sugar cane farmer Dattatray Bagal and his brothers saw his father’s pyre burn on a river bank near their farm last month, they had to put their grief aside to pay for the financial cost of the impact of the coronavirus on her family.

They had hoped to buy a tractor for the small farm in western Maharashtra state, but the brothers spent all of their savings on hospital treatment for their father and three other family members who survived.

“We can’t think of big ticket purchases this year,” said Bagal as he irrigated the fields on the farm below the mountains of the Western Ghats.

“The hospital bill was 820,000 rupees (11,191). That not only used up our savings, it also forced us to take out loans from relatives, ”said the farmer, who also contracted the virus in his family.

“We lost our father and we went into debt too. We will pay the debt back in two to three years, but the personal loss can never be made up.”

Such reports have become commonplace in rural communities in the vast Indian hinterland after a devastating second wave of infections that peaked in the past two months.

Bans imposed by authorities trying to contain the surge compounded the pain, but at least the monsoon season, which began this month, is expected to deliver normal rainfall.

Some farmers like Yogesh Patil from Maharashtra’s Sangli district have been hit so badly that they have no money to buy seeds and fertilizers for growing summer crops like corn and soybeans.

“I expected to earn more than 100,000 rupees from a one acre lot of tomatoes. But prices collapsed because of the lockdown and I couldn’t cover production costs, ”Patil told Reuters.

Almost two-thirds of India’s 1.35 billion people live in rural small towns and villages, and the rural economy accounts for about a third of the country’s gross domestic product.

Whatever the Indian economy recovers from the pandemic, the agricultural sector is unlikely to be of much help as rural households are in debt, unable to make purchases necessary to increase their agricultural production or have the money in theirs Let communities circulate.

Rural India was largely spared during the first wave of infections, which peaked in September, as the agricultural sector grew 3.6% in the fiscal year ended March, although latest official estimates showed the economy as a whole rose 7.3% shrank. But the second wave seems to have washed away that resilience.

“The mood in the hinterland is very weak this time around, and even those with money are choosing to save instead of spending or paying off loans,” said Ramesh Iyer, managing director of Mahindra Finance, one of the largest shadow lenders in the rural sector.

Iyer said even as farm incomes rise, fewer people are taking out home, auto and personal loans, and nearly one in three borrowers is delaying repayments. This is either because bans have restricted activity or people have stopped income, or they prefer to save for emergencies.

Mahindra & Mahindra (MAHM.NS), India’s largest tractor manufacturer, sold 22,843 tractors in May, 12.6% less than in April for the worst month of the year.


The spread of the coronavirus in the countryside highlighted the lack of medical infrastructure and the effects of the epidemic are still being assessed, with little confidence in official numbers on infections and deaths as tests for the disease have been pitifully inadequate.

India’s vaccination campaign has also lagged far behind the curve, with fears of a possible third wave affecting people’s confidence in the economic outlook.

“There are serious concerns about rural demand and business,” said Rupa Rege Nitsure, chief economist at L&T Financial Management, adding that much depends on how quickly India is vaccinating its rural towns and villages.

The rating agency ICRA continues to expect the second wave to have a sustained negative impact on consumer sentiment and demand, with health and fuel expenditures burdening disposable income and in 2021/22 there will be less catching up to do compared to the previous year.

Increasing input costs, especially for fuel, have negated the benefits farmers have taken from the improved prices for their produce over the past six months.

“We rent tractors for plowing, sowing and fertilizing,” says Gajanan Patil, a farmer from Maharashtra. “Since diesel prices have reached a record high, plow fees have also risen by 30%. We even have to pay more for harvesting and transporting them to the markets.”

($ 1 = 73.2725 Indian Rupees)

Additional coverage from Aditi Shah; Editing by Sanjeev Miglani & Simon Cameron-Moore

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