Death trap

Inderjit Singh Jaijee’s Movement Against State Repression (MASR) has put the number of debt-related suicides in the last three-four years at over 6,000.

However, the facts do not support these claims. The rights group released a fresh list of debt-related suicides in six villages — Andana, Khanauri, Benarsi, Karoda, Gulahari and Munak — in Sangrur district but a visit by this correspondent to these villages revealed that only a few of these cases were directly linked to debt.

In Andana village (Munak sub-division), for instance, MASR has listed five debt-relatedsuicides but the villagers said two of these were allegedly the victims of drug-addiction and alcoholism. Of the remaining, only two suicides were related to huge debts. The fifth, a woman, drowned accidentally.

In other villages as well, family tensions, drug addiction and alcoholism, were cited as the main factors for suicides, with debt also playing a contributory role. The activists appear to have exaggerated facts to draw attention but their role in highlighting the problem of rising debts cannot be denied. Official estimates put debts at about Rs 5,700 crore — just about a half of this comes from artias (local commission agents) at interest rates varying from 24 to 36 per cent a year. The interest alone amounts to Rs 1,103 crore — a huge amount in absolute terms averaging to Rs 11,000 per farmer.

“The problem of debt is acute but it is more due to financial mismanagement than any crisis in agriculture. With fragmentation of land holdings, small farmers have been forced to live beyond their means,over-spending on agricultural inputs and non-productive domestic consumption,” say experts.

A recent study conducted by economist H.S. Shergill reveals that modernisation of agriculture in the State had led to a considerably higher increase in the costs of farm inputs as compared to a growth in the output.

For instance, while cash expenditure on the cultivation of wheat went up over six times between 1975-76 and 1996-97, output grew at only 6.69 per cent per a year. Similarly, input costs on the cultivation of paddy was up 10 times in the same period but output increased at only 11.80 per cent per year. Worse, the growth in per capita income has failed to match the growth in agricultural production it is mainly because of population growth and the absorption of lakhs of migrant labourers by Punjab agriculture. “The per capita income has grown at a rather slow rate of about 1.5 per cent per year over the last three decades. Even this has been absorbed mostly by the increase in living standards of thefarming community,” says the Shergill study.

Ultimately, farmers are left with little surplus cash to finance the heavy cash expenditure on modern farm inputs. They are forced to borrow huge amounts at high rates of interest from artias and cooperatives to meet their cash expenditure requirements for farm inputs. “The situation gets out of hand when farmers marginal and small divert funds for procurement of farm equipment and social ceremonies such as marriages. They do not have the capacity to repay the debt and get trapped,” says a former sarpanch (Gill Khurd) Jarnail Singh.

In such a situation, farmers sell their land holdings to repay their debts. But this does not help. In fact, things only worsen as about 45 per cent farmers have land holdings of less than five acres. Two brothers committed suicide in Jodhpur Village (Sangrur district) last month after they sold their land to repay their debt. In quite a few suicide cases, marginal and small farmers walked into the debt-trap by taking loan fortractors even though it was not financially viable for them.

The penchant of farmers for tractors has also contributed substantially to the problem of indebtedness. Even if their financial state does not permit them to possess a tractor, they acquire one because it has become a status symbol. In a few cases, loans to buy tractors — which are sold at discounted prices — are diverted for marriages and other social ceremonies. In Gill Khurd village (Bhatinda district), there are over 110 tractors for 960 acres of land. Of the 13 villages covered by the Shergill study, about 70 per cent cultivating households in two villages had tractors. In another four, more than 50 per cent households owned tractors. In the remaining, there was not a single village where proportion of cultivating households was less than one-third.

In such a situation, the rising debts can play havoc with the rural economy in Punjab if immediate steps are not taken. For about 86 per cent Punjab farmers routinely and regularly borrow fromcredit agencies. Last week, the Government relaxed norms for loans from cooperatives but the changes are unlikely to have much impact. What is needed are a few bold initiatives on issues such as crop insurance, cooperative farming, more investment in research, education of farmers and crop diversification. For if any meaningful solution to the problems of the agricultural sector, the situation has to be looked at in totality. The piecemeal approach will not work.