Chained to debt in life and death

The peasant (in India) is born in debt, lives in debt, dies in debt and bequeaths debt. This is what Sir Malcolm Darling, a famous British researcher and writer, wrote in 1925 after studying the condition of undivided

Punjab’s peasants. Had Darling been alive today he would have rephrased his statement; he would have said the Indian farmer is born in debt, lives in debt, is beaten for debt and dies in debt.

The country was in deep shock as the video of a small farmer in a village near Thanjavur being beaten up by the police and bank agents went viral on social media. Before we could recover from this, the suicide of a small farmer in Ariyalur district of Tamil Nadu deepened our pain.

What was their crime? They failed to pay the remaining instalment of a loan on time to a private bank. Will a defaulting politician or government servant be treated in this manner?

It is ironic that a small farmer is brutally assaulted for defaulting on two instalments while many high-profile entrepreneurs reportedly defaulting on loans of over ₹1000 crore are let free.

Many farmers’ organisations have been questioning the differential treatment meted out to them. It is a reasonable question. Is this how we reward our annadata , without whom we would not have increased our foodgrains production from 51 million tonnes in the fifties to 257 million tonnes today?

The coexistence of prosperity and indebtedness among Indian farmers is not a new phenomenon. However, what’s puzzling is that cases of indebted farmers committing suicide, which has now become a recurring phenomenon, never surfaced before the 1990s.

A couple of years back only a few agriculturally less-developed regions in Maharashtra, Andhra Pradesh and Karnataka were identified as the hotspots of such suicides.

But they have now become a widespread phenomenon, even in the agriculturally well developed states of Punjab, Haryana and Tamil Nadu.

Between the mid-1990s and today, over three lakh farmers have committed suicide in India. According to the 47th annual report of the National Crime Records Bureau, about 11,772 farmer suicides were reported across India during 2013 alone, with Maharashtra recording nearly 27 per cent of them.

The Radhakrishna Committee on Agricultural Indebtedness (2007) appointed by the Government has clearly underlined in its report that agricultural indebtedness is the prime reason for the re-emergence of such disturbing trends. Ironically, even nine years after the committee submitted its recommendations, farm indebtedness continues to trigger suicides.

The National Sample Survey Organisation (NSSO) survey report of 2014 confirms the worsening of indebtedness. It underlines that about 52 per cent of agricultural households in the country are estimated to be in debt, especially in Andhra Pradesh, Telangana and Tamil Nadu.

The survey reports that the average debt per agricultural household is ₹70,580, whereas the yearly income from cultivation per household is only ₹77,112. Shockingly, in spite of the implementation of the massive loan waiver scheme and doubling of agriculture credit, farm indebtedness has not receded. Where is the problem?

The Radhakrishna Committee has categorically pointed out that indebtedness and other related problems occur mainly due to poor returns from cultivation, as has the National Commission on Farmers (2006). Increased cost of cultivation seems to be one of the main reasons for poor remuneration.

Recent studies, including that by the Commission for Agricultural Costs and Prices (CACP), have emphatically stated that the cost of cultivation in most of the crops escalated almost four times higher during the first half of the current decade alone.

The inaccessibility to markets due to bad roads also escalates transportation and marketing costs, eating up as much as 15 per cent of farmers’ gross revenue.

In order to meet the expenses, farmers prefer rural moneylenders over banks as the latter charge numerous fees, the cost of which often cancels whatever benefit they get on account of interest subsidy. The report of the Rangarajan Committee on Financial Inclusion (2008) has also highlighted this fact.

When there is a serious physical limitation to the delivery of agriculture credit, why have the Reserve Bank of India and Nabard remained silent spectators?

Like all other enterprises, farming also rests entirely on profits. The farmers’ decision to cultivate rests on the premise that income from the farm will be substantially higher than cultivating cost.

In most of the crops investigated by scholars, profits were either fluctuating or the value of output (VOP) from crops cultivation and the cost (c2) were almost the same. In both the situations, a farmer’s survival is at stake as it robs his profit margins.

At a time when government employees stand to benefit from the 7th Pay Commission, the financial position of farmers remains the same as it was a decade back.

Their income and consumption expenditure are almost the same. This is reiterated by the latest NSSO survey report which shows that the average monthly income per agricultural household was ₹6,426, whereas the average monthly consumption expenditure was ₹6,223.

Some 10 years back, farmers received approximately ₹5 for selling a kilogram of onion or tomato or potato. Farmers today get almost the same price for these commodities.

Policymakers have been advocating that an improvement in crop productivity will solve farmers’ woes. However, improved crop productivity cannot take place in the absence of better remuneration. Farmers can get better remuneration only when efforts are taken to bridge the gap between ever-increasing costs of farm inputs and lower price for their produce.

The serious physical limitation to the delivery of agriculture credit needs to be tackled at the earliest. The market intervention scheme has to be implemented to protect farmers from making distress sales.

Policymakers must also understand that without making concrete arrangements to augment farm income, farmers will continue to live in debt and die in debt.

Narayanamoorthy is head of the department of economics and rural development, Alagappa University; Alli is head of the department of social sciences, Vellore Institute of Technology