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Issue of farmer’s suicide in India

Present issue

  • Farmers in Maharashtra have gone for strike recently.
  • Demand of the farmers includes:
  • Full waiver of farm loans,
  • Hikes in the minimum support price for agricultural produce and
  • Writing off of pending electricity bills.
  • As the strike nears the end of its first week, prices of essential goods such as milk, fruits and vegetables have risen steeply.
  • This hike of price causes distress to consumers which in turn shake the economic pillars of the country.
  • The Reserve Bank of India has warned of inflationary risks from fiscal slippages caused by large farm loan waivers.

Small and marginal farmers in India

  • Of the total households in India, Small and marginal farmers constitute 80 per cent of total farm households, 50 per cent of rural households and 36 per cent of total households in India.
  • Farm output contributes about 15% to the India’s economy.
  • From an eagle-eye point of view, nobody wants to be a farmer anymore, for it is unremunerative and relatively hard physical work.
  • Also the children of farmers aspire for a well-paying urban job.
  • But the economy is not producing enough jobs to accommodate the migrants from farmer families. This leads to frustration, despair, unrest, hence, the riots.

State of farmer’s distress

  • Farmer’s suicides, while numbering 12,600, have declined, from a peak level of 18,241 in 2004, and 17,368 in 2009.
  • But according to the most recent NCRB data, farmer suicides in the country rose by 42% between 2014 and 2015.
  • With 3,030 cases, Maharashtra recorded the highest number of farmer suicides in the country (37.8%).
  • Telangana was second, with 1,358 cases, and Karnataka third with 1,197.
  • Six states of Maharashtra, Telangana, Andhra Pradesh, Madhya Pradesh, Chhattisgarh and Karnataka accounted for 94.1% of total farmer suicides.

Causes behind farmer’s problem

Increased production

  • Steep fall in the prices of agricultural goods due to bumper production this year
  • Production of Tur pulses, for instance, increased five-fold from last year to over 20 lakh tonnes in 2016-17.
  • Though procurement of crops at MSP supposed to provide remunerative price to the government but except rice and wheat, the MSP has been low for most crops.
  • It leads to distressed farmers selling their crops at much lower price.

Cost of inputs and credit facilities

  • Costs of inputs to the agriculture have risen to an unsustainable level.
  • Cost of inputs cannot be recovered in the years when the rainfall is less than normal or insufficient for the crop to grow.
  • Small and marginal farmers also do not have access to institutional credit.

For example: Maharashtra has on paper 21,185 village-level PACS that are supposed to meet the requirements of its 1.36 crore-odd farmers. But the truth is that about 34 per cent of farmers in the state do not even have access to institutional crop credit,

  • Most of these farmers take loans from the local moneylenders on high interest rates.

Food prices

  • The table documents the course of prices of six food items. Two dominant conclusions are:
  • Producer prices (whether minimum support prices of the government of India or wholesale prices) have risen by about 5 to 10 per cent over the last year.
  • At the same time, consumer prices of selected and volatile food items (fruits, vegetables and pulses) have stayed broadly constant over the last three years.
  • The problem is price discovery. In fact, there is deflation in pulse and vegetable prices.
  • The RBI has acknowledged that already falling vegetable prices dipped more sharply because of ‘fire sales’ following demonetization, and pulses are cheaper because of high output on top of imports.
  • The sharp fall in food prices has kept consumer price inflation tepid, rural distress has been aggravated.
  • Commerce Secretary, Rita Teaotia asked organic goods exporters to certify their products as it would help boost competitiveness in the global markets.

Presence of middlemen

  • Due to lack of storage and transportation facilities, farmers cannot sell their produce directly in the markets, hence there is always need of middle men/big traders.
  • These traders only provide a fraction of the actual market price to the farmers, rest they keep for themselves.

Loan waiver

  • Finance Minister, Arun Jaitley, on Monday, reminded that the States going in for farm loan waivers will have to generate funds from their own resources, in context to the farmers’ agitations.
  • The issue of loan waiver has cropped up in several States.
  • The Centre has its policies for the agriculture sector, under which there is a provision for interest subvention and other support.

Other factors

  • Fragmentation of land holdings and a fall in public investments in rural areas, especially in irrigation facilities.
  • It has been confirmed by many reports that majority of the subsidies by government is going to the medium or large farmers.
  • In the eyes of the government, only those in whose name the land is registered are seen as farmers. Landless laborers, working for living on farm escape the government consideration.
  • Demonetization came in like a hurricane, an all-round destructive force. The farmers need cash to transact sales, but there is no cash in the system and loss in country’s national income.
  • Reports suggest there is a lot of looting, and stealing of liquor.
  • Rural lending growth collapsed to 2.5% in the second half of 2016-17 and even shrank in several States, including Punjab and Maharashtra.

Loan waiver

  • A loan waiver is the waiving of the real or potential liability of the person or party who has taken out a loan through the voluntary action of the person or party who has made the loan.
  • Loan waivers might help the government buy peace with farmers in the short run, but they are unlikely to change much on the ground.
  • The issue of loan waiver has cropped up in several States.
  • Finance Minister, Arun Jaitley, on Monday, reminded that the States going in for farm loan waivers will have to generate funds from their own resources, in context to the farmers’ agitations.
  • The Centre has its policies for the agriculture sector, under which there is a provision for interest subvention and other support.

 Suggestions

Following are some of the suggestions to tackle the issue of farmer distress:

  • Increasing the crop insurance cover.
  • Reforming Agricultural Produce Marketing Committee.
  • Introducing the model contract farming law.
  • Ensuring the availability of water to the farms of small and marginal farmers.
  • Ensuring the access of the marginal farmers to the institutional credits.
  • Government needs to create awareness among rural populations about new schemes and their rights.
  • Removing the middlemen between the farmers and consumers would ensure price stability of the essential commodities.
  • The “land to the tiller” policy needs to be implemented in India so that those who are actually doing the farming get the benefits due to them.
  • Labor and land reforms also need to be revisited to create more opportunities beyond farming, and irrigation and other infrastructure projects speeded up to boost farm productivity.

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