The Farmer In Debt ….

The data on credit to farmers released by the National Bank for Agriculture and Rural Development (NABARD) on August 7, 2023 was presented in the Lok Sabha by the Union State Finance Minister. According to the data, the burden of loans on the farmers of Punjab is the highest in the country.

In Punjab, the loan per farmer family is Rs 2.95 lakh. Punjab is followed by Gujarat (Rs. 2.28 lakh), Haryana (Rs. 2.11 lakh), Andhra Pradesh (Rs. 1.72 lakh), Kerala (Rs. 1.47 lakh), Madhya Pradesh (Rs. 1.40 lakh), Uttar Pradesh (Rs. 1.13 lakh) and West Bengal, (Rs. 80 thousand). These loans to farmers are from commercial banks, cooperative banks, and regional rural banks in various states of India.

Apart from this, the farmers have loans from moneylenders, commission agents, traders, shopkeepers, relatives and friends, and other non-institutional sources.

A 201415 survey in 27 villages in the south-western region, central plains, and Shiwalik semi-foothills region of Punjab was conducted by Dr. Gian Singh (Author), Dr. Anupama, Dr. Gurinder Kaur, Dr. Sukhvir Kaur, and Dr. Rupinder Kaur. It revealed that the per household debt for marginal farm category was Rs.230700, small farm category was Rs.494051, was Rs. 609766 semi-medium farm category, medium farm category was Rs.786761, large farm category was Rs.1352696 and per agricultural labour household was Rs.54709.

However, the debt per acre on arable land was Rs.65169 for marginal farmers, Rs. 55574 for small farmers, Rs. 52839 for semi-medium farmers, Rs.45399 for medium farmers, and Rs.50211 for large farmers. These figures depict that as we scale down from the large farm category to the marginal farmers category , the burden of debt generally increases.

The origin of Agriculture Price Policy in India can be traced back to the Second World War. During this period, the then ruling government fixed Maximum Prices of some agricultural commodities to control the rising prices of food grains for protecting the interests of the consumers, but Minimum Prices of some agricultural commodities to protect the interests of the farmers.

The survey also revealed that except for the large farmer category, all the other categories of farmers and agricultural labourers are not able to repay their loans because their income is less than their minimum consumption expenditure. They try to maintain a minimum level of consumption whether they afford it or not.

These categories of farmers and agricultural labourers are compelled to borrow money to maintain a minimum level of consumption, which they cannot repay on time, adding to their debt.

On the day of the country's independence on August 15, 1947, the second big news besides Independence was the shortage of food grains. The Planning Commission of India was established in 1950 and the Five-Year Plans were introduced from 1951.

During the First Five Year Plan (1951-56), to overcome the scarcity of food grains in the country, the main priority was given to the development of the agricultural sector. As a result the production of food grains increased so much that this problem was solved to a large extent.

During the Second Five Year Plan (1956-61), the main priority was given to the development of the industrial sector instead of the development of the agricultural sector. During this period, the country again faced the problem of scarcity of food grains.

The drought in the country during 1962-64 further increased the scarcity of food grains. During this period, the scarcity of food grains in the country had increased to such an extent that the government of that time had to face the challenge of wooing foreign countries to provide food grains to its people.

In order to overcome this problem, the central government decided to introduce a “New Agricultural Technology” in the country. After studying various regions of the country, the central government also decided to introduce this technology in Punjab on priority.

Behind this decision of the central government were the hardworking and courageous farmers, agricultural labourers, rural artisans, and the rich natural resources of Punjab.

Due to the hard work of the courageous farmers, agricultural labourers, rural artisans, and excessive use of natural resources of Punjab, the country was able to overcome the scarcity problem of food grains. Initially, the New Agricultural Technology was adopted only in relation to wheat.

The production of wheat increased to such an extent that the central government got rid of the trap of trying to get food grains from foreign countries.

The technology adopted in the country was a package of high-yielding seeds, assured irrigation, chemical fertilisers, pesticides, herbicides, fungicides, machinery, and modern methods of farming. Adoption of this agricultural technology eliminated the scarcity of food grains in the country, but due to the high costs, and continuously declining need for labour input, the cost of agricultural production increased. The employment opportunities for farmers, agricultural labourers, and rural artisans declined significantly.

An important phase of India's Agriculture Price Policy began in 1965 with the establishment of the 'Agricultural Prices Commission' and the 'Food Corporation of India'.

Since its establishment, the 'Agricultural Prices Commission' has been making its recommendations to the Central government regarding fixing the Minimum Support Prices (MSP) of some agricultural commodities. The Central government has generally been accepting these recommendations.

In order to increase the productivity and production of food grains in the country, the 'Agricultural Prices Commission' recommended a substantial increase in the prices of agricultural commodities for the five years 1965-69. But during a period of 53 years, from 1970 till now, the recommendations made by this commission were against the interest of farmers.

The new economic policies adopted in the country since 1991 in favour of the capitalist/corporate world have made agriculture a loss making business. The prices of inputs used in agricultural production are increasing rapidly.

The prices of two main inputs: DAP fertiliser, and diesel, used for agricultural production increased significantly which has led to a major increase in agricultural production costs.

Due to an increase in mechanisation and use of herbicides for agricultural production, employment opportunities for farmers, agricultural labourers, and rural artisans have decreased, resulting in a decrease in their income.

Research studies conducted in different regions of the country have revealed that most of the farmers, agricultural labourers, and rural artisans are born in debt and poverty. They live a hard life, and leave huge debt and abject poverty for the future generations. They either die a miserable natural death, or when all hopes of their lives are cut off by the government and the society, they have also taken the path of death by suicide.

The farmers' children of Punjab, Haryana and some other states are migrating to foreign countries at a large scale. This migration is causing a brain drain, capital drain, loss of demographic dividend, and many other problems for these states and the entire country.

The tax policies adopted by the Government of India have reduced the net income of farmers. According to a study conducted by OCED-ICRIER has revealed that during the 17 years from 2000-01 to 2016-17, as the result of implicit taxes, the farmers of the country have lost Rs.45 lakh crore which works out around Rs 2.65 lakh crore per year.

It is important for the food security of the country that the debt of farmers, agricultural labourers, and rural artisans should be written off once and necessary changes in agricultural and economic policies should be made thereafter.

In 1951, about 80 percent of the country's population was dependent on the agricultural sector for its livelihood, which was being given 55 percent of the national income. Today, about 50 percent of the country's population is dependent on the agricultural sector for its livelihood. The sector is being given only about 16 percent of the national income.

It is necessary to increase this share at least to such an extent that the basic needs of all the sections dependent on the agricultural sector, food, clothing, housing, healthcare, education, clean environment, and social security, are met in a respectable manner.

Employment under the MGNREGA scheme to the marginal and small farmers, agricultural labourers, and rural artisans should be provided as per their needs. The wage rate under MGNREGA should be at par with the minimum rates of wages fixed by the Central and State Governments.

Interest-free loans should be given to all the categories of farmers except the large farmer category, agricultural labourers, and rural artisans, according to their needs. Apart from the government measures, farmers have to adopt cooperative farming.

According to a research study conducted by Professor Bina Aggarwal, there are more than 68,000 landless women cooperative farming societies in the state of Kerala. These landless women do cooperative farming by leasing land on rent.

The agricultural production of these women is 1.9 times and the net economic profit is 5 times as compared to the ordinary farmers. Farmer, agricultural labourer, and rural artisan organisations should make a meaningful contribution in this regard by educating farmers, agricultural labourers, and rural artisans that suicide is not a solution to any problem, but causes misery for the rest of the family.

Human beings can live without cars, bunglows, aeroplanes, costly smartphones, and other luxury items but not food. The government and society should put every effort for the welfare of the different sections working day and night in the agricultural sector under tough conditions.

DR. GIAN SINGH is a former Professor, Department of Economics, Punjabi University, Patiala. Views expressed are the writer’s own.