The Situation Assessment Survey (SAS) of agricultural households, released last week by the National Sample Survey Office (NSSO), is the second one ever to be done. The SAS of 2003 was necessitated by the agrarian crisis of the time. Farmer suicides had reached a peak, and the reference year for the survey, 2002-2003, had seen severe drought. The agricultural sector was in crisis, with growth rates slowing to 1 per cent, the terms of trade going against it, incomes dropping drastically and wages almost stagnating.
This time, the situation is different. The reference period, 2012-13, was a year with record foodgrain production and a normal monsoon. The sector has bounced back, with an average growth rate of 4 per cent over the last decade. The terms of trade have moved in its favour, credit flow to the sector has increased four-fold, and public investment in agriculture, which had been declining since the 1980s, has risen dramatically. Even agricultural workers are doing better, with wages rising by 6 per cent per annum in real terms, the highest in the last decade.
Yet a comparison of findings from the two surveys does not give the impression of a substantial change in the lives of farmers. While the percentage of farmer households has come down marginally in rural areas, the proportion of small and marginal farmers (defined as those with less than two hectares of land) has gone up marginally, from 84 per cent in 2002-03 to 87 per cent in 2012-13. The percentage of farmers who are indebted has increased from 48.6 per cent to 51.9 per cent. Despite the flow of credit to rural areas, the proportion of farmers who depend on non-institutional sources has only gone down from 42.3 per cent to 40.2 per cent. The share of local moneylenders in outstanding loans has remained unchanged at 26 per cent.
Meanwhile, the percentage of area irrigated has increased from 48 per cent in 2002-03 to only 50 per cent in 2012-13. This despite the fact that most public investment in agriculture went into irrigation infrastructure. The percentage of farmers who were aware of minimum support prices (MSPs) went down from 70 per cent to 68 per cent, even though MSP operations have nearly doubled in the last decade. Almost 60 per cent of farmers in 2002-03 had no access to modern technology through government extension services. A decade later, that figure remains the same. Only 4 per cent of farmers insured their crops in 2002-03; this has increased to a mere 4.8 per cent in 2012-13.
So, a cursory reading of the report would suggest a period of stagnation in the situation of Indian farmers. How does that square with the fact that this decade has also been the golden period of Indian agriculture? One explanation could be that the growth of the agricultural sector was not so much the result of government intervention as of the entrepreneurial ability of farmers. That is a strong indictment of successive governments that have continued to neglect the sector. But the fact that most government interventions have failed to reach farmers, despite increased financial outflow, is evidence of the government’s failure to understand the nature of farming in this country, or the situation of farmers. The revival of agricultural growth rates after 2004-05 also indicates the resilience of the farming community to various shocks, both natural and manmade.
But this is not surprising, given that, for the majority of small and marginal farmers, agriculture is the only livelihood. Even though the report suggests a growing diversification of their income portfolio, agriculture still accounts for roughly half of their total income. The vulnerability of farmer households becomes apparent in the fact that, in most cases, the income from agriculture is barely enough to keep the household above the poverty line. For most small and marginal farmers, even those with other sources of income, consumption expenditure exceeds income from all activities.
The growth of agricultural productivity in the last decade appears to be driven by the private initiative of small and marginal farmers rather than the efforts of the government. This is partly evident in the fact that the share of public investment in Indian agriculture has come down sharply in the last decade. Much of the resilience also comes from the farmers’ ability to adapt to new technology such as Bt cotton.
But what does this mean for the growth of the agricultural sector or the lives of farmers in future? While it is too early to say that this situation may not be sustainable, some signs of stress are already visible. The issue of farmers suicides has reared its head again. International commodity prices are falling and some of this is transmitted to the domestic economy, with unsold agricultural produce leading to further stress. Input costs have continued to rise, which means an onslaught on the basic livelihood of farmers, who already have to deal with government apathy. Last, the degradation of natural resources, in the absence of government support and extension services, has also meant that climatic factors will continue to remain important determinants of agricultural productivity.