Anjana Biswas, fondly known as Anjana Didi at her village is a marginal farmer from Nadia in West Bengal. A paddy farmer with limited earning on fragmented land, she was struggling to make ends meet. A mere earning of Rs 8,000 a month from farming, was turning out to be increasingly challenging for her to run a four-member family. Her irrigation needs were met through diesel pumps but the steep rise of diesel over the last few years, only added to her drudgery. The increasing erratic rainfall in the last few years forced her to shift to mono-cropping with very limited productivity.
SwitchON Foundation, a leading not-for-profit in the energy sector came forward to help Anjana didi from her plight. SwitchON shared the benefits of solar pumps over diesel pumps with her. Previously she was sceptical, but after a few exposure visits to nearby farmer’s fields using solar pumps, she took a chance. After that, there was no turning back! “Previously, banks refused to give loans to poor farmers like us and wanted collateral against the loans, which we were incapable of providing. But SwitchON facilitated the loan for solar pumps from banks, which made life a lot easier for me” shared Anjana Didi.
“The rising diesel prices acts as a hindrance for cultivating during non-monsoon seasons. Off-grid solar pumps are the right solution but lack of access to finance becomes a major roadblock for small farmers” said Ekta Jaju, Co-founder of SwitchON Foundation. . With solar pumps, she can grow paddy, mustard and even vegetables without facing water scarcity. She uses the profit from her farming to help fund her kid’s education and give them bright futures.
“Rising diesel prices would have made it impossible for me to continue farming. But now with solar, my children can also continue farming peacefully without having to migrate to urban areas for work” added Anjana Didi. There is no doubt about the power that a solar pump can have in shaping and transforming rural livelihoods.
Like Anjana Didi and thousand other small and marginal farmers face the brunt of rising diesel prices. But now, the sun shines brighter for small and marginal farmers in India as SwitchON Foundation has partnered with Punjab National Bank for the promotion of solar pumps. A First Loss Default Guarantee Fund will be set up by SwitchON Foundation through which Punjab National Bank will be financing solar pumps. “This partnership is extremely important in creating an ecosystem for encouraging large scale deployment of solar pumps. It is perhaps a first of its kind agreement between a private not for profit organisation with a leading public sector bank to set up a Guarantee Fund, which is otherwise, usually set up by Governments” said Vinay Jaju, Managing Director of SwitchON Foundation.
Guarantee funds are set up to improve project bankability and reduce lender’s risk perception – such arrangements have been set up by the Ministry of MSME to increase lending for small business . In this unique arrangement the guarantee fund is being set up to facilitate financing of solar pumps for unbankable small marginal farmers without having to offer any collateral – which will lead to meeting countries energy security, reduction in emissions and improving farmers income.
Because of the guarantee fund’s comfort, the leading public sector bank is offering a longer than usual payback period of 7 years.
It comes with a zero down payment for up to 1.6 lakhs of loan for small and marginal farmers Senior PNB Official, Kolkata Zone, Punjab National Bank said “This is a novel joint initiative on the part of our Punjab National Bank and SwitchON where it will provide finance for purchasing solar pumps for farming which will reduce cost of farming along with promoting clean energy with respect to environmental impact of farming under different subsidy schemes of the Government”. PNB officials of Punjab National Bank joining from Delhi Head Office said “This partnership would ensure our footprint in the Eastern region and result in an inclusive and balanced growth among the small and marginal farmers. The tie-up will not only popularize use of solar pump sets but will also help in increasing income of the farming households ”
Previously, SwitchON partnered with RBL and Axis Bank to sanction loans for over 100 solar pumps, but it is the first time that a Nationalized Bank has come forward for the financial partnership. There has been zero Non-Performing Assets (NPA) till date and farmers have seen a 1.6x rise in income after the adoption of solar pumps. Stephanie Jones of Good Energies Foundation one of the key funders of the guarantee fund said that “We are confident that solar pumps can improve farm production and all participating farmers will easily pay back these loans. The default guarantee is a great tool for helping more farmers access bank loans while recognising the bank’s need to gain first-hand experience with new technologies”.
SwitchON Foundation will be conducting farmer sensitization, awareness drives and farmer due diligence before finalizing the disbursal of each loan. In East India, 96% of the farmers are small and marginal and “irrigation is essential to pull these farmers out of poverty, but they are overburdened with recurring diesel prices and high electricity bills” says Surajit Chakraborty Program Manager of SwitchON Foundation.
“This kind of partnership will achieve the goal to reduce greenhouse gas emissions, conserve natural resources and enhance the quality of life of marginal farmers to ensure equity and just transition” says Mahasweta Chakraborty Deputy Project Manager of SwitchON Foundation. The official target of the central PM-KUSUM scheme of India is to achieve 30.75 GW of solar energy generation by 2022. The new partnership is likely to accelerate the achievement of these targets so that India can enhance its ambition and NDCs in future. Although solar pumps have a large potential in India to scale up and financial barriers have been slowing it down in India.
Aditi Mukherji of IWMI said “SwitchON is one of the recipients of IWMI-SDC SoLAR Innovation Grants for their project of working with women farmer’s groups and providing them access to solar irrigation pumps. Finance remains a key gap, and they are working on group financing modalities, which is much needed”. Amongst the top priorities in the world, access to clean energy tops the list as it has a direct link to livelihoods , improving quality of life and stopping runaway climate change and ensuring just transition.
There is very limited access to finance in the renewable energy sector for marginalised communities. But finally, the winds of change are in the air, and the renewable energy industry is unfurling its sails to take advantage.
( Vinay Jaju, 9331178105, email@example.com)