Andhra Pradesh and Telangana have the dubious distinction of logging the highest number of farmer suicides in the country. The main reason is the existence of a faulty mechanism due to which government credit for agriculture does not reach the small farmer.

This has resulted in the prevalence of high indebtedness among small and medium farmers, according to Assocham’s recent study on ‘Farm Structure Reform’.

The study finds that over two-thirds of the landholdings of households in the country are of 1 hectare or less and Government credit is not reaching them, due to which there is a high level of indebtedness among such households and little access to good farming practices.

Assocham has brought out the "huge vulnerability of farming households in Andhra Pradesh to indebtedness" as compared to other states due to their largely uneconomic land holdings.

Andhra Pradesh (including the now Telangana) farmers have had the highest rate of suicides in the country for some decades now. Besides, this vulnerability is also seen among the urban population holding small farm plots in these states.

The study released today says that there was a strong case for such landholdings to be collectively farmed either under the corporate model or by the cooperative pooling of land. With such farm holdings "it is unrealistic to expect the next big stride in agriculture", the chamber cautioned policymakers.

The study based on data from the NSSO 70th round of survey and half-a-dozen of the chamber’s own studies on various aspects of the rural scene, found that of 9 crore households, over 23 lakh households held tiny landholdings of 0.01 ha or less, 2.87 crore households had 0.01 to 0.4 ha plots, and 3.14 crore households had 0.41 to 1.0 ha of mostly farming land plots.

The study revealed that for households with small landholdings the traditional moneylender was the source of farm credit. These debts carried high interest rates (as much as 25 per cent or more) and that the debt burden "is far higher than what their asset value could hold". Indebtedness among cultivators was in "inverse proportion" to the extent of land they held, the smaller ones carrying larger debt burdens in all states across the country.

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