They had hoped to buy a tractor for the small farm in western Maharashtra state, but the brothers spent all their savings on hospital care for their father and three other family members who survived.
“We can’t think of any big ticket purchases this year,” Bagal said as he irrigated the farm fields under the Western Ghats mountains.
“The hospital bill was 820,000 rupees ($ 11,191). This not only depleted our savings, but also forced us to borrow from relatives, ”said the farmer, who also caught the virus when he ravaged his family.
“We lost our father and we got into debt as well. We will pay off the debt in two or three years, but the personal loss can never be made up.”
Such stories have become commonplace among rural communities across India’s vast hinterland following a devastating second wave of infections that peaked in the past two months.
Closures imposed by authorities trying to contain the surge added to the pain, but at least the monsoon season, which started this month, is expected to provide normal rainfall.
Some farmers like Yogesh Patil from Sangli District in Maharashtra have been hit so hard that they have no money to buy seeds and fertilizers to plant summer crops like corn and soybeans.
“I expected to earn over 100,000 rupees on a one acre tomato plot. But the prices collapsed due to the foreclosure and I was unable to recoup the cost of production,” Patil told Reuters.
Almost two-thirds of India’s 1.35 billion people live in small towns and villages in the countryside, and the rural economy accounts for about one-third of the country’s gross domestic product.
So, whatever rebound the Indian economy derives from the pandemic, the agricultural sector is unlikely to be of much help as rural households are in debt, unable to make the necessary purchases to boost their agricultural production or circulate the money in their communities.
Rural India was largely spared in the first wave of infections, which peaked in September, with the agricultural sector increasing 3.6% in the fiscal year ended in March, although the latest official estimates have showed that the economy at large had contracted by 7.3%. But the second wave seems to have taken away this resilience.
“This time the feelings in the hinterland are very low and even those with the money are choosing to save rather than spend it or pay back loans,” said Ramesh Iyer, Managing Director of Mahindra Finance. , one of the largest parallel lenders in the rural sector.
Iyer said that even with increasing farm incomes, fewer people are taking home, auto and personal loans, and nearly one in three borrowers are delaying repayments. This is either because lockdowns have restricted activity or people’s income has ceased or they prefer to save for emergencies.
Mahindra & Mahindra, India’s largest tractor manufacturer, sold 22,843 tractors in May, down 12.6% from April for its worst month this year.
SLOWED VACCINATION IN RURAL AREAS
The spread of the coronavirus in the countryside has revealed the scarcity of medical infrastructure, and the impact of the epidemic is still being assessed, with little confidence in official figures on infections and deaths, as Tests for the disease have been woefully inadequate.
India’s vaccination campaign is also far behind the curve, and fears of a potential third wave are undermining people’s confidence in the economic outlook.
“There are serious concerns about demand and rural businesses,” said Rupa Rege Nitsure, chief economist at L&T Financial Management, adding that much depended on how quickly India was vaccinating its rural towns and villages.
Rating agency ICRA continues to expect a prolonged negative impact of Wave 2 on consumer sentiment and demand, with health and fuel spending eating away at disposable income and less pent-up demand in 2021/22 by compared to last year.
Rising input costs, especially for fuel, have eroded the profits farmers have from improving the prices of their produce over the past six months.
“We hire a tractor to plow, sow and bring fertilizer,” said Gajanan Patil, a farmer from Maharashtra. “While diesel prices have reached an all-time high, plowing costs have also increased by 30%. Even to harvest the crop and transport it to the markets, we will have to pay more.