How a credit lifeline for India’s farmers has turned into a debt trap

Meerut, India – The past of the overgarment had begun to peel disconnected Mohammad Mohsin’s location 2 years ago. The faded green, achromatic and yellowish paints connected the walls inactive bore stains from past year’s monsoons.

A narrow, 3-foot-tall (0.9 metres) transition lone imaginable to participate by crouching, led from the room into a courtyard lined with buffalo dung, a rusting scooter, and a creaking cot successful bluish India’s Meerut district, astir 100km (62 miles) from New Delhi.

“We volition get the location painted erstwhile it’s yet wedding time,” Mohsin had said, leaning connected an robust shovel, erstwhile Al Jazeera visited him successful February earlier this year, referring to his sister Aman’s wedding plans.

But the day for the wedding came and went – without it being solemnised.

In 2023, Mohsin had borrowed astir $1,440 nether the Indian government’s Kisan Credit Card (KCC) scheme. “Kisan” means “farmer” successful Hindi.

Launched successful 1998, the KCC inaugural is intended to modernise agrarian recognition by providing accessible, short-term, low-interest recognition to farmers for cultivation expenses, thereby replacing exploitative backstage moneylenders.

Issued against onshore holdings, the KCC operates similar a revolving recognition line, allowing farmers to get astatine the commencement of a harvest rhythm and repay aft the harvest. With a humble involvement complaint of 4 percent annually, the strategy is among the astir accessible fiscal instruments for millions of farmers.

But for years now, the KCC strategy has deviated from its archetypal purpose. Farmers successful agrarian India, wherever agriculture hardly sustains families and wherever dowry successful marriages is the norm, person utilized KCC loans arsenic a convenient but unsafe alternate to household income.

The KCC wealth Mohsin borrowed successful 2023 from a state-run bank’s section subdivision was not meant to sow sugarcane oregon bargain fertiliser. He ever meant to usage it for his sister’s dowry: Aman’s prospective in-laws had demanded a Maruti Wagon-R car, a larger Mahindra Scorpio SUV, and hundreds of thousands of rupees successful cash, erstwhile the matrimony was planned.

KCC looks and tin beryllium utilized similar a regular recognition card, including for currency withdrawals. Clutching the family’s KCC paper issued successful his begetter Mohammad Kamil’s name, Mohsin withdrew the wealth from an ATM and went consecutive to a car trader successful Meerut to marque the down outgo for a Wagon R car.

In February 2025, Aman’s projected matrimony collapsed nether a caller acceptable of dowry demands. By now, Mohsin was already successful important indebtedness and had nary wealth to sow crops, oregon put successful seeds oregon workplace machinery.

He was besides saddled with the car helium had bought for the groom. He missed paying the monthly instalments a fewer times. When farmers neglect to repay during a harvest cycle, the involvement complaint jumps from 4 percent to 7 percent, which is what happened with Mohsin.

He present repays the indebtedness successful tiny instalments, but knows that helium volition beryllium playing catchup for years. And the longer helium delays his payments, the higher the hazard that the indebtedness could beryllium classified arsenic a non-performing plus (NPA), damaging his recognition standing and aboriginal borrowing capacity.

Meanwhile, 22-year-old Aman finished Fazilat, a seven-year people successful Islamic theology offered by Darul Uloom, a salient Muslim seminary successful Deoband, astir 80km (50 miles) from Meerut. The people is considered the equivalent of a bachelor’s grade from a regular college.

Aman’s household has besides resumed its hunt for different groom. “I volition get joined erstwhile the close household agrees,” Aman told Al Jazeera.

But families bash not conscionable agree. They negociate – and dowry is the currency. Tens of thousands of Indian women person been killed by their in-laws implicit dowry demands. In 2024 alone, India saw a dowry-related decease each 30 hours, according to information from the National Crime Records Bureau.

“In our portion of the world, nary dowry means nary groom,” Aman’s 60-year-old mother, Amina Begum, told Al Jazeera, sitting successful 1 of the corners of their sparse home.

Once a groom is finalised and the caller dowry demands are negotiated, Mohsin volition request currency again. And helium whitethorn person to trust connected the KCC scheme, again.

But a caller KCC indebtedness cannot beryllium sanctioned until the erstwhile 1 is afloat repaid. The lone mode astir this involves section middlemen who assistance farmers repay the involvement connected existing KCC loans, and get the main renewed successful the slope arsenic a caller loan. In exchange, these middlemen complaint an involvement complaint arsenic precocious arsenic betwixt 2 and 5 percent per day.

The result: If Mohsin gets different KCC indebtedness sanctioned, helium volition request to usage that to besides repay the middlemen who helped him get it – perpetuating the rhythm of indebtedness helium is trapped in.

Mohsin astatine his location adjacent Meerut successful India [Ismat Ara/Al Jazeera]

‘System breaks your dignity’

India’s farmers person constricted authorities enactment for unexpected oregon dense idiosyncratic expenses, specified arsenic infirmary bills, children’s education, societal obligations, oregon adjacent weddings – often forcing them to trust connected informal recognition oregon cultivation loans meant for farming needs.

For instance, India’s nationalist healthcare spending is among the lowest globally, consistently nether 2.5 percent of the gross home merchandise (GDP). The constricted resources enactment a important strain connected mediocre families successful cases of aesculapian emergencies.

As a result, crossed India’s agrarian belt, chiefly successful the north, the KCC strategy is being drained to plug life’s emergencies, exposing a heavy agrarian distress.

A farmers’ national person and a politburo subordinate of the Communist Party of India, Vijoo Krishnan, says that successful summation to weddings, farmers are progressively utilizing KCC loans for healthcare and education. This diversion of wealth leads to what Krishnan calls a “development indebtedness trap”, wherever farmers are forced to instrumentality connected loans conscionable to conscionable basal endurance needs, alternatively than to put successful productivity oregon growth.

A 2024 survey published successful The Pharma Innovation Journal, an Indian interdisciplinary work that besides features probe successful agriculture and agrarian development, recovered that lone a fraction of KCC loans spell towards agriculture. About 28 percent of the KCC-holding farmers who were respondents successful the survey said they utilized the money for household needs, 22 percent for aesculapian expenses, 14 percent for children’s education, and astir 10 percent for marriage-related expenses.

“Farming hardly pays capable to prolong a family,” said Mohammad Mehraj, the erstwhile caput of Mohsin’s Muslim-majority colony of Kaili Kapsadh. “If there’s a aesculapian exigency oregon a wedding, the unit is excessively much.”

The fearfulness of repayment haunts farmers, rooted successful the heavy shame that nonaccomplishment brings. Everyone has heard the stories. “In a adjacent village, a antheral successful his forties was declared a defaulter. His sanction was work retired successful the colony square. The shame was truthful unbearable that his woman moved backmost to her parents’ home,” Mohsin recalled. The antheral successful question, helium says, has not been seen since. No 1 knows if helium fled, oregon if helium is adjacent alive.

Mohsin lives with the aforesaid fear. “The strategy doesn’t interruption down your door, it breaks your dignity,” helium said. In tiny villages with close-knit communities, a slope official’s sojourn to the location to question repayment of loans is seen arsenic an embarrassment to beryllium avoided astatine each costs.

“I’d alternatively starve than person a slope antheral sound connected our door,” said Mohsin’s father, Kamil, who is successful his 70s, his dependable hardly supra a whisper. Around him, others nodded successful agreement.

To flight shame, farmers similar Mohsin trust connected the middlemen who complaint a steep involvement complaint to assistance them renew KCC loans without settling the principal.

Thomas Franco, a erstwhile wide caput of the All India Bank Officers’ Federation, said that portion schemes similar KCC person expanded recognition entree for farmers, they person besides created a indebtedness trap.

“At the harvest time, galore farmers, already burdened with earlier debts, are forced to instrumentality further loans. Loans intended for productivity often get diverted to conscionable contiguous societal obligations,” helium told Al Jazeera.

By 2024, the Indian government’s authoritative information shows that the KCC strategy had disbursed much than $120bn to farmers, a crisp emergence from $51bn successful 2014.

But those numbers disguise a much analyzable world successful which banks go a portion of the serial indebtedness crisis, portion showcasing precocious numbers of indebtedness disbursals, Franco said.

“The loans get renewed each twelvemonth without existent repayment, and successful the bank’s books, it shows arsenic a caller disbursal, adjacent though the husbandman does not get the existent funds. This exaggerates the occurrence numbers,” helium said.

Meanwhile, arsenic India’s farmers find themselves buried successful mountains of debt, galore are taking their ain lives.

In 2023, Maharashtra, India’s richest state, contributing astir 13 percent to the country’s GDP, reported the highest fig of husbandman suicides – astatine 2,851. This year, Maharashtra’s Marathwada portion is 1 of the worst hit. In the archetypal 3 months of 2025 alone, the portion recorded 269 suicides, marking a 32 percent summation from the aforesaid play successful 2024.

In neighbouring Karnataka, betwixt April 2023 and July 2024, 1,182 farmers died by suicide, chiefly owed to terrible drought, harvest nonaccomplishment and overwhelming debt. In the bluish authorities of Uttar Pradesh, husbandman suicides roseate by 42 percent successful 2022, compared with the erstwhile year. Similarly, Haryana, besides successful the north, reported 266 workplace suicides successful 2022, up 18 percent from 225 successful 2021.

Critics reason that without heavy structural reforms aimed astatine providing amended nationalist payment systems for farmers and their families, specified arsenic affordable healthcare, prime education, and reforms to marque farming profitable, schemes similar the KCC volition stay short-term solutions.

Jayati Ghosh, a starring improvement economist and prof astatine the University of Massachusetts Amherst, said that India’s cultivation recognition strategy is fundamentally retired of sync with however farming works.

“Crop loans are typically structured for a azygous season, but farmers often request to get good earlier sowing, and tin lone repay aft harvesting and selling. Forcing repayment wrong that constrictive model is unrealistic and harmful, particularly erstwhile farmers deficiency the enactment to store crops and hold for amended prices,” she said.

Ghosh, who co-authored a 2021 argumentation study for the Andhra Pradesh authorities and has studied agrarian distress for much than 3 decades, told Al Jazeera that cardinal Indian fiscal institutions – the Reserve Bank of India (RBI), the cardinal slope and NABARD, the apex agrarian improvement slope – were to blasted for treating agriculture similar immoderate different commercialized enterprise.

“The nonaccomplishment lies with NABARD, the RBI and successive governments. Agricultural lending needs to beryllium subsidised, decentralised and designed astir existent conditions successful the field,” she said.

Schemes similar the KCC, she said, are built connected the flawed content that currency unsocial tin lick agrarian distress.

“We’ve built a recognition strategy assuming farmers conscionable request money. But without concern successful irrigation, onshore security, section harvest research, retention and marketplace access, loans won’t lick the crisis,” she said.

Mohsin (left) and a relative survey their fields portion wondering whether farming has immoderate aboriginal astatine each successful India [Ismat Ara/ Al Jazeera]

‘I wonderment if farming adjacent has a future’

The KCC strategy has besides been riddled with controversies, with aggregate loan scams surfacing crossed India successful caller years.

In Kaithal, a municipality successful bluish Haryana state, six farmers utilized forged documents to unafraid astir $88,000 successful loans, which ballooned to $110,000 earlier detection, owed to accrued involvement implicit clip aft the farmers failed to repay them.

In the Himalayan authorities of Uttarakhand, cultivation trader Mohammad Furkan, successful collusion with a slope manager, created fake bills and shade loans worthy $1.2m successful 2014, earning him a three-year condemnation successful March 2023.

In Lucknow, the superior of Uttar Pradesh authorities wherever Meerut is located, 3 State Bank of India managers sanctioned astir $792,000 successful fraudulent KCC loans betwixt 2014 and 2017, utilizing forged onshore records and fake documents. The national Central Bureau of Investigations (CBI) booked them successful January 2020 aft an interior slope inquiry. The substance is inactive being probed.

Yet, slope officials accidental that contempt years of scams and reddish flags, the KCC strategy continues to endure from anemic oversight.

“There’s nary systemic cheque successful place,” said a indebtedness disbursal cause affiliated with the National Bank for Agriculture and Rural Development (NABARD), who has been processing KCC applications successful agrarian Uttar Pradesh for much than a decade. He spoke to Al Jazeera connected information of anonymity, arsenic helium is not authorised to talk to the media.

But adjacent if the KCC was cleaned up and each scammers punished, it would not lick the problem, accidental immoderate husbandman leaders.

“This is not astir debt. It’s astir dignity,” said Dharmendra Malik, the nationalist spokesperson of the Indian Farmers’ Union, a salient group. “You can’t lick agrarian distress with casual loans. You request concern successful irrigation, storage, acquisition and guaranteed prices for the crops.”

Back successful Kaili Kapsadh, Mohsin’s buffalo stood tethered successful the courtyard, swatting flies with its tail. It is worthy $960 and, successful this village, that is simply a presumption symbol, akin to owning a vintage car successful a affluent municipality suburb.

But prestige does not wage backmost loans. Mohsin has not been capable to renew his family’s KCC loan, worthy astir $1,500, for much than 2 years. He is inactive repaying the past one.

Each harvest yields the aforesaid bitter harvest for him: much bills and losses. Looking astatine his sugarcane fields, already browning nether a harsh sun, helium said: “Sometimes I wonderment if farming adjacent has a future.”

If you oregon idiosyncratic you cognize is astatine hazard of suicide, these organisations whitethorn beryllium capable to help.