A farmer in Kuttanad died by suicide, claiming his low CIBIL score was due to the payment system that prevented him from availing new crop loans.
Paddy cultivation activities in Kerala Photo: K A Shaji
“The system failed me, and I’m so lost that I can’t find my way back,” paddy farmer KG Prasad of Thakazhy in Kerala’s traditional rice bowl Kuttanad in the Alappuzha district told his friend Sivarajan over the phone a few minutes before consuming the poison that would take his life.
Prasad, 55, was declared dead on the morning of Saturday, 11 November, at a hospital in Thiruvalla, where he had been rushed for treatment.
He consumed pesticides — kept at home to spray on rice seedlings — late on Friday, reportedly over a lack of options to stay afloat amidst a mounting financial crisis.
A death note found at his home attributed his suicide to the refusal of banks to grant him agricultural loans due to a pending PRS (Paddy Receipt Sheet) loan, defaulted by the state government.
In Kuttanad and Palakkad, Kerala’s two traditional rice bowls, the public sector procuring agency SupplyCo, or Kerala State Civil Supplies Corporation, procures paddy directly from farmers by issuing these PRSes instead of cash.
The cash-strapped government and its procuring agency have been citing the PRS as an excuse for not paying farmers, who would otherwise have to wait months for payments for paddy.
Farmers are permitted to pledge the PRS to banks to obtain loans for the same amount for which the paddy was sold.
When the state government receives a subsidy from the Union government and gets new resources, it will repay the bank loan and interest.
Paddy farming in Kerala. (KA Shaji)
As per the state government’s claims, this way farmers would not be subject to the protracted delay in repayment and the accruing loan interest.
Unfortunately, most farmers in Kuttanad and Palakkad are unaware that the PRS is indirectly putting them in a terrible financial situation.
As soon as the loan is approved based on the state government’s surety, it is reported to the Credit Information Bureau of India, or CIBIL, which collects information on how effectively citizens handle their finances.
Banks grant loans based on the CIBIL score, and most paddy farmers in Kerala have a low score due to the state government’s ongoing default on PRS loans.
Prasad’s CIBIL score was quite low because he had a PRS debt, and last year he opted for a one-time settlement of an agricultural loan that had been due for a long time.
Banks waive interest and penal interest for one-time settlements of bad loans through negotiation, and the CIBIL marks the loan as settled in the score data sheet.
Banks use the “settled” status of previous loans as an impediment to issuing new loans.
Prasad’s family members claimed that if the PRS loan failure had not occurred, the difficulties surrounding the one-time settlement might have been handled with ease.
Banks’ branch managers have the authority to grant loans to clients who have chosen a one-time settlement in good faith.
“Banks are now refusing to grant new loans to me because I have a PRS loan. I had used the PRS loan to settle expenses related to the paddy I supplied to the government. As a result, the government must be blamed for my death,” said Prasad in his suicide note.
According to Muthalamcore Mani, general secretary of the National Farmers’ Forum, PRSes have become a trap for paddy farmers in both Palakkad and Kuttanad, where SupplyCo is in charge of procurement.
Paddy fields in Wayanad. (Creative Commons)
He told South First that farmers were forced to avail of PRS loans due to the state government’s lack of funds.
He demanded prompt payment of prices to framers — either in cash or via bank transfer — following each procurement.
“The government must find additional resources ahead of time to pay the price without driving farmers to default on bank loans,” he said.
He also believed that money could be diverted from other departments by giving an assurance of repayment once the harvested paddy had been processed and sold by the agencies involved.
Mani also urged the state government to put pressure on the Union government to release subsidies on time.
However, Kerala’s Food and Civil Supplies Minister GR Anil stated in New Delhi that the delay in repayment of PRS loans would not affect farmers’ CIBIL scores.
He said SupplyCo had purchased 4,896 kg of paddy from Prasad during the 2022–23 season. A payment of ₹1,38,655 was sanctioned under PRS through the state-owned Kerala Bank.
The minister said that the loan repayment date had not yet arrived, so the question of defaulting on the loan did not arise.
Anil further claimed that there was no default or delayed payment on PRS loans availed by paddy farmers throughout the state.
According to SupplyCo sources, the Union government had been continuing to sanction its share of the paddy procurement price. The Union government currently owes SupplyCo over ₹637 crore, putting the agency in an unprecedented financial crisis.
SupplyCo has been unable to directly repay the farmers’ loans due to a shortage of finances. To make matters worse, banks have been hesitating to lend to the state entity since it has already crossed the borrowing limit.
Furthermore, the Kerala government has been unable to allocate funds to SupplyCo due to budgetary constraints.
A few days ago, prominent Malayalam actor Jayasurya addressed the matter, emphasising the “plight” of the farmers. At the time, the state government declared that everything was in order and claimed the actor was making false claims.
According to agricultural officials, Kerala’s present paddy purchase plan has been operational since 1997–98.
A paddy farm in Palakkad. Photo: K A Shaji
Both Union and state governments work together to implement the decentralised programme.
Initially, SupplyCo purchased paddy directly from farmers and transferred the payments to their respective bank accounts.
The paddy is subsequently converted into rice by the agency before being distributed through the state’s Public Distribution System (PDS) or ration shops.
The quantity of rice procured by SupplyCo and added to the state PDS system formed part of the state’s share of food grains.
As a result, Kerala obtains food grains from the Food Corporation of India only after deducting SupplyCo’s share of rice.
However, recent budgetary constraints have had a significant impact on the process. To pay the farmers, the state government put together a consortium of banks, including SBI, Federal Bank, and Canara Bank, two months ago.
Due to bank delays in ensuring timely delivery of funds other than loans to farmers, the government determined that PRS was more realistic.
According to official data, SupplyCo purchased 7,31,184 metric tonnes of paddy from 2.5 lakh farmers in Palakkad and Kuttanad until 31 July. The farmers should have received ₹2,070.71 crore in total. However, only ₹1,820.71 crore has been distributed.
Around 23,000 farmers were yet to receive the amount from SupplyCo.
The state government decides the paddy procurement price in Kerala, which has two components: The minimum support price (MSP) decided by the central government based on the recommendation of the Commission for Agriculture Cost and Price; and second, the incentive bonus given by the state government.
In Kerala, the MSP for one kilogram of paddy is ₹20.40, with a state incentive bonus of ₹7.80 per kg.
In the 2022–23 season, the government set the price of paddy at ₹28.20 per kg.
Governor Arif Muhammad Khan, who visited the hospital in Thiruvalla where Prasad’s body was kept, stated that farmers in the state have been facing a terrible crisis, and his “heart goes out to Prasad’s family”.
Opposition leader VD Satheesan expressed deep grief over the death and claimed that the administration had failed and that payments to farmers had been overdue for months.
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