Opinion Distress in Telangana
Farmers’ suicides point to the problem of exclusion of tenant-cultivators from the formal financial sector
Ground-level reports from Telangana in this newspaper have documented a resurgence of farmer suicides. The difference this time, though, is that the victims are largely landless farmers: people who took land on lease to grow cotton or maize. With no owned land to show as collateral, they couldn’t access crop loans from banks and had to, then, borrow from informal moneylenders to pay the lease rent up front as well as to finance purchase of seed, fertiliser and other inputs. These farmers may well have been tempted by the high crop prices of last year to borrow at 24 per cent or more annual interest. Their bets, however, went horribly wrong because of poor monsoon rains.
The latest suicides highlight a serious problem — of cultivators being excluded from the formal financial sector simply by virtue of not having land titles in their names. This makes no sense because the lessee-farmer is putting to productive use land that the original owner wouldn’t ordinarily farm. By doing so, he is doing both himself and the owner — apart from the consumers of his produce — a favour.
According to the Agriculture Census for 2010-11, over 1.5 million hectares of land in India is being cultivated under different leasing arrangements. Even that figure might be an underestimate, given that in many states, leasing out agricultural land is illegal. The apparent reason is it undermines the principle of “land-to-the-tiller”, whereas the reality is that today’s so-called landlords are hardly the zamindars of the old feudal era. In most cases, their holdings are small and uneconomic, while the ones leasing in do it mainly with a view to farm intensively or augment their operational area.
We need a regime that allows landowners to legally lease out their holdings, with assured resumption of possession at the end of the agreed tenancy contract period. Such recorded lease agreements, along with pledging of the crop to be produced, can serve as collateral for bank loans, while simultaneously securing the interests of landowners. In this context, the new government’s “Bhoomi Heen Kisan” scheme that seeks to provide institutional credit to landless farmers through the formation of joint liability groups is welcome. Lending to such groups, comprising farmer-members who would stand as guarantors for each other’s repayment, could help minimise risks for banks. But government schemes cannot substitute for an active land lease market.
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