What aam kisans want

But this government wants everyone to go rural. To the best of my understanding, there are 607 districts (2001 Census). Read the budget speech on national rural employment guarantee. How have we managed to conjure up 596 rural districts? This is reminiscent of the 2005-06 budget speech, as originally delivered, not as printed. In the delivery, PURA was described as provision of rural amenities in urban areas. The reform agenda would have benefited not just farmers (those who own land), but also rural labourers. In passing, figures on the number of farmers are grossly over-stated. People ascribe 72 per cent (or 65 per cent) to the total population (not even the work-force) and derive a rural population figure, then equate this with agriculture. Not more than 50 per cent of employment in rural India is agricultural (Economic Survey says 52 per cent) and, barring the principal earner, other members of the household often earn a living outside agriculture. There is a seasonal element to this too. Hence, actual figures are probably like 100 million landless labourers and 125 million farmers. And we have a little over 100 million holdings, 60 per cent marginal (less than 1 hectare) and another 20 per cent small (1 to 2 hectares). If we don’t reduce the number of people employed in agriculture, there is not enough land to redistribute.

Though the answer also depends on what is done with the land and whether it is irrigated (60 per cent of Indian agricultural land is not), it should be obvious that less than 2 hectares is sub-optimal, particularly in dry-land areas. Therefore the importance of that reform agenda. True, barring trade, most of these policies are state-level. However, a government focused on the aam farmer could have done much more to incentivise such changes. True, a trillion-dollar economy can, and should, financially afford the agricultural transition that developed countries went through before an industrial revolution. But debt relief doesn’t facilitate that transition, though it may be placebo, and the issue is not 0.3 per cent of GDP (per year) or whatever the eventual figure. National Crime Records Bureau data surface with a time-lag. With that caveat, around 110,000 people commit suicide every year. Around 16,000 to 17,000 are farmers, with the figure sharply increasing in 1998 and then again in 2004, before dropping in 2005. The intention is not to be heartless about farmer suicides. However, one should note that compared to the number of farmers in the work-force, the number of farmers committing suicides is relatively lower; and we should not be heartless about all suicides, not just farmers.

In general terms, farmers commit more suicides than landless labourers. One can debate whether agricultural wage rates have kept pace with inflation. Subject to inter-regional variations, they often have, leading to higher real wage rates. However, for farmers, there has been a double squeeze, because input costs (including wages) have increased while output prices have not increased proportionately. And fragmentary data suggest farmer suicides are concentrated in Maharashtra, Andhra Pradesh, Karnataka, Madhya Pradesh and Chhattisgarh, though some other states (Kerala, Goa) also figure in the list.

Let us take two propositions. First, farmer suicides are caused by debt; and second, suicides are generally associated with the commercialisation of agriculture, such as the prevalence of cash crops. Anyone with any respect for evidence should agree that the second proposition is empirically more robust than the first. Let us splice this with the findings of the Radhakrishna Committee report. First, only 48.6 per cent of farmer households are indebted and only 57.7 per cent of debt (there is an alternate figure of 51.3 per cent) is formal. That is, only 28.4 per cent of farmers are indebted to the institutional system. Second, 74 per cent of debt from non-institutional sources (money-lenders) is at rates in excess of 20 per cent, sometimes 30 per cent.

Third, other than the reform agenda mentioned earlier, commercialisation and absence of satisfactory risk-mitigation instruments are responsible for debt and suicides. Though the Radhakrishna Committee didn’t use such language, the present crop insurance scheme is a joke. And let us not forget a finding mentioned in passing, though it didn’t form part of the main thrust of either findings or recommendations.

Fourth, the government failed to utilise the farm relief package the prime minister announced for 31 districts in AP, Maharashtra, Kerala and Karnataka. That doesn’t augur well for the present placebo treatment.

Consider also the following. First, there will be discrimination in favour of farmer suicides, as opposed to other suicides. There are poor among non-farmers and they too commit suicides and are also often in debt. Is that the reason why the entire country is now becoming rural? Second, debt waiver can only be linked to the formal credit system, which means access by relatively rich farmers. So we reinforce inequity that also has a regional dimension, and discriminate against the Centre, East and Northeast. Third, debt waiver is only for crop loans. But poorer farmers don’t borrow under this head. They borrow for smoothening consumption, for livestock, implements, marriages and medical treatment. Fourth, regardless of agro-climatic region, state of irrigation and use of land, should we have a uniform cap of 2 hectares? Fifth, given the sentiments about corporate governance that emanate from North Block, shouldn’t we acknowledge that boards of banks should have independent decision-making powers? Sixth, if the true intention is to recapitalise cooperative banks, let us be transparent. Can a trillion-dollar economy afford such follies?

The writer is a noted economist

bdebroy@gmail.com