As COVID-19 funeral pyres burn, India’s rural economy goes up in smoke

Satara, INDIA: After seeing his father’s funeral pyre burn by a river near their farm last month, Indian sugarcane producer Dattatray Bagal and his brothers had to put their grief aside to count the financial cost of the impact of the coronavirus on their families.

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.

“The hospital bill was 820,000 rupees (US $ 11,191). This not only drained our savings, but also forced us to borrow from relatives,” Bagal said as he irrigated the areas. farm fields under the mountains of the Western Ghats.

“We lost our father and we got into debt too. We will pay off the debt in two or three years, but the personal loss can never be made up,” said Bagal, who also caught the virus when he ravaged his house. family.

Such stories have become commonplace among rural communities in India’s vast hinterland following a devastating second wave of infections that has peaked in the past two months.

READ: Relapse of COVID-19 pandemic causes problems for Indian middle class

Closures imposed by authorities trying to contain the surge have 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 such as corn and soybeans.

“I expected to earn over 100,000 rupees on a 1 acre plot of tomatoes. 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 India’s 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.

COMMENT: India’s COVID-19 crisis could cause lasting economic scars

Rural India was largely spared in the first wave of infections, which peaked in September, as the agriculture sector grew 3.6% in the fiscal year ended March, although the latest estimates Officials 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 off 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. It’s either because lockdowns have restricted activity, 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.


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.

READ: In rural India, fear of tests and vaccines hampers fight against COVID-19

India’s vaccination campaign is also far behind the curve, and fears of a potential third wave are sapping 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 2021/2022 compared to last year.

Rising input costs, especially for fuel, have eroded the benefits farmers received 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 get it to market, we will have to pay more. “

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