< Previous | Contents | Next >
9. FARM INDEBTEDNESS AND AGRIPOLICY
Indebtedness among the farming community has always been a major concern for the Government. Once the number of suicides by farmers increased to the alarming levels, indebtedness among the community re- entered into the domain of the public debate. Today, considered as the biggest cause of suicides by farmers, the government policies related to farm sector need re-examination and the very framework of agri-policy needs restructuring.10
For farmers’ suicides, bankruptcy and indebtedness have been cited as a major cause—around 37 per cent of all suicides by the farmers today. Usually, local money-lenders were portrayed as the villain in it. But as per the latest National Crime Records Bureau (NCRB), 2015 data, 80 per cent of the farmers who committed suicides in 2015 due to ‘bankruptcy or debts’ had borrowed money from institutional sources (banks and registered microfinance institutions). Besides, the country has seen a threefold increase in the famers’ suicide due to bankruptcy and indebtedness (from 1163 of 2014 to 3097 in 2015). In 2015, a total of 8007 farmers committed suicides
due to various reasons. It was for the first time that the NCRB categorised farmers’ suicides due to debt or bankruptcy based on the source of loans. Similar findings come from the latest ‘Situation Assessment Survey of Agricultural Households in India’ report of the NSSO too. Nearly 52 per cent of agricultural households in India are indebted and levels of debt are as high as 93 per cent in Andhra Pradesh and 89 per cent in Telangana, as per the report.
The changed understanding about farm suicides make at least one thing clear that by allocating more funds to enhance farm loans is not enough.
The situation of farmers’ income remains highly distressed in the country, as per the latest NSSO report (cited above). An agricultural household has been defined in by it as a household receiving value of produce of more than Rs 3,000 from agriculture with at least one member self-employed in farming. Interestingly, it shows that for 56 per cent of the marginal land owning families (with land less than 0.01 hectare) wage and salary employment, not agriculture, was their principal source of income. Another 23 per cent reported livestock as their principal source of income.
Average monthly income per agricultural household was estimated at Rs 6,426 while the net receipt from farm business (cultivation and farming of animals) accounted for 60 per cent of the average monthly income per agricultural household. Income from wages and salary accounted for nearly 32 per cent of the average monthly income.
About 44 per cent of the estimated agricultural households in the country had an employment guarantee scheme or MGNREGA job card. However, only 38 per cent in the lowest land class (less than 0.01 hectare) had job cards. Further, 12 per cent of all households and 13 per cent marginal land holding households did not have a ration card that entitles them to subsidised food.
Institutional and Non-Institutional Loans
There was a perception that except non-farm factors it was overall agrarian distress that forced farmers to suicides. Even if some suicides were caused by indebtedness, it was due to the high-handedness and exploitative behaviour of the local money-lenders on whom farmers largely depend for their loans. The official feeling was that once the spread of institutional lending gets healthier this problem will be addressed. But the latest data tell a completely different story—majority of farmers who committed suicides had taken loans from the institutional sources. It may be explained in the following way:
• Among the institutional sources, the micro-finance agencies have spread with much faster pace in recent years—the Government giving them liberal spread aimed at promoting financial inclusion in rural areas in general, and farming community in particular.
• Though micro-finance agencies are easily accessible, their interest rates are not less exploitative than the local money-lenders.
• Besides, the loan recovery method of these agencies lacks a ‘human touch’, which is not the case with money-lenders due to their feeling of belongingness to the same society or village.
• The case of banks is not much better other than some interest subsidies they give.
In the event of crop failures or for some other reasons, indebted farmers are available with no alternative of repaying their debt and even sustaining life. In absence of any other financial support system, such farmers are highly prone to committing suicides.
Given the current situation, allocation of higher funds for farm loans does not look serving the purpose (the Union Budget 2017–18 allocating Rs. 9 Lakh Crore for it!). Such acts, on one hand have been increasing the financial burden on the exchequer, on the other hand they have not been able to protect the farmers from bankruptcy and indebtedness in the real sense either. In the changed scenario, to handle the crisis, the following steps look more suitable:
• Other than enhancing the penetration of formal/institutional lending (which increased fourfold in the last decade) there is a need of putting
in place ‘complementary income’ support system for the farm community. Given the monsoonal and climate-related variability increasing, it looks even more apt.
• Majority of weak and marginal farmers fail to take benefit from the institutional sources of loans. This should be addressed on priority basis.
• Minimum support price operations should be able to include all of the weak farmers.
• To serve the purpose of creating additional sources of income to the farmers, the current scheme of ‘skilling’ and promoting agro- processing industries at the local level are needed. The scheme of ‘smart cities’ should be also linked to the farmers.
• Allied activities to agriculture such as dairy, poultry, fisheries, etc., should be promoted in a targeted way.
• Awareness regarding farm insurance must be enhanced among the farmers on high priority.
• The actions of the banks and micro-financing institutions should be monitored from all possible perspective at the local level.
• Once the proposed idea of ‘UBI’ is launched, small and marginal farmers should be necessarily included in the very first go (in case it is not launched universally, as the Government of India has indicated) taking clues form the latest findings of the NSSO reports.
• In general, the causes of ‘agrarian distress/crises’ should be re- examined and addressed with suitable policy actions on priority basis— a more holistic policy framework is need of the hour for the agriculture sector.
The latest reports remind us that little has changed for farmers in the past one decade (during which farmers’ suicides have spread even in the traditional Green Revolution areas where farmers were believed to be richer and financially more secured). It clearly proves that the agriculture sector, which sustains half of the country, is still out of the real attention of Government
policy, although in the last two years we see an increased focus from the Government of India on the farming sector.