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| Agrarian Crisis in India |
Before jumping directly into the topic, let's analyse the agriculture sector of India first.
Agriculture sector is a crucial sector of Indian economy contributing nearly 17% of the GDP falling from 50% of its contribution during independence.
Now every day there is news of farmers suicide coming from across the country. The average farmers suicide now stands at 45 per day.
Why are the Farmers committing suicide?
The farmers suicide is not a recent phenomenon. It is happening for nearly past 10 years now. The distress in agriculture sector is growing day by day resulting from more farmers suicide.
Why are Indian farmers earning less compared to their counterpart in developed countries?
1. Irrigation
Only 47% of India's agricultural land is irrigated though agriculture consumes nearly 60% of the water resource available. Most of the Indian farmers are relying on traditional method of irrigation which is flood irrigation mainly.
While their counterparts in the developed countries use modern methods of irrigation like drip irrigation and sprinkle irrigation which use less amount of water thus supporting water conservation also.
2. Employment
The number of people employed in agriculture in India is substantially high compared to developed countries. These types of employment is called Disguised Employment. It means if we remove a section of workforce from the agriculture sector there will be no impact on productivity. While in developed countries 95% of agriculture is mechanised but in our case it is mere 23%.
3. Land Fragmentation
According to recent Agriculture Census (2015 - 2016), the land Fragmentation has increased 100% within a span of 45 years from (1970 - 1971). While the average land holding size has decreased nearly 50% within the same period of time.
4. Country's Export Policy
No concrete measures have been taken by the Government of India to boost the country's agriculture export. At a time while other countries are getting more and more aggressive with various measures to make their product competitive, India stands alone. Rather the Government takes some short term policy measures like subsidising the agriculture export and rising the MSP of various agricultural produce, etc. which drag India to WTO.
5. Productivity
The productivity of our crop is abysmally low when compared to their counterpart in developed countries. Most of our farmers are still using the age old technology. Though Green Revolution has helped a lot. But it is not adequate because the surge in productivity during green revolution was limited to some regions of the north west region of India and it has helped to increase productivity of Paddy and Wheat crops only.
Root Causes of farmers distress
1. Credit System
Most of the Indian farmers are small and marginal farmers who have no access to institutional credit system. As they don't have much landholdings as collateral, banks fear to give them loans. No access to institutional credit system also put these farmers in debt trap.
2. Market
Indian farmers don't have proper market access to sell their produce at the rate devised by GOI. So they sell their produce to private players who take at a very low price compared to the MSP declared by the Government.
3. Storage
Indian farmers don't even get the cold storage facility also. So most of the crop gets wasted before going to the market for sale.
4. Input Cost
As Government is slowly removing the subsidies provided to farmers on purchase of pesticides, seeds, fertilisers, etc. So input cost is rising and farmers are not getting the returns on the investment.
5. Volatility in Price
As there is no stability in the price of crops that are not covered under MSP, so the farmers are not getting proper returns on their produce.
6. Dependency on Monsoon
Indian farmers still depend on the monsoon for sowing seed in their crop. As the monsoon varies year to year, it increases the plight of farmers.
7. Climate Change
Due to climate change, various natural disasters in form of cyclone, drought, flood, etc. are becoming more frequent which are causing great damage to the crop.
Is Farm Loan Waiver solution to the crisis?
Farm loan waiver might be a political gimmick to get some votes, but it is very bad for the economy of the country as well as for Governance.
Reasons:
1. When government waive the farm loan, it takes the obligation of farmers to repay the debt on its shoulder. It weakens the already stressed banking system.
2. When states declare farm loan waiver, it increases the fiscal deficit of the state.
3. It didn't help most of the farmers who are generally small and marginal farmers as they are out of the institutional credit system.
4. As government completely waive the loan instead of restructuring the loan, it destroys the Credit Culture of the country.
Generally Government say the ill effects of waiver gets mitigated as this loan waiver picks up private investment thereby increasing the GDP. But two reports, World Bank report 2012 and CAG report 2013 shades different pictures on loan waiver.
Global Bank report says the loan waiver didn't help in capital formation. So the objective of government about private investment doesn't hold good.
CAG report revealed that there were many Commission and Omission errors, Clearance Certificate errors, etc.
What are the solutions to agrarian crisis?
1. Irrigating all agricultural land with modern micro-irrigation technology.
2. Giving Market access to the farmers to sell their produce at proper rates through simple process.
3. Creating storage facilities through PPP models.
4. Rather than giving subsidies, farmers can be provided with a fixed amount of Credit through DBT before sowing seeds.
5. Ensuring Institutional credit access to all types farmers and sharecroppers also.
6. Covering all crops through Insurance.
7. Restructuring loans instead of waiving it.
8. Implementing Swaminathan
Commission recommendations.
9. Empowering farmers organisations.
10. Diversifying farmers income source through Dairy, Poultry and Fishery, etc.
11. Increasing Productivity.
12. Use of modern machines.
13. Setting food processing units there by strengthening the supply chain.
14. Encouraging agricultural Start Ups.
15. Encouraging agricultural export.
All these above stated reforms can only bear fruit if you we can implement those things efficiently and effectively. Central Governments new schemes like e- NAM, PMKSY, PMFBY are some good steps in the right directions.
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