Given the high investment and negative incentives such as input subsidies, small farmers have not benefited from government schemes.
Everything about the suicide of the farmer from Dausa, Gajendra Singh, save the tragedy for his family, has been theatre — the very public venue, the occasion of a political rally, the politicians happily playing their populist cards, and the media’s focus on trivialities. The tragedy is being skilfully milked for all its political mileage without addressing the grave issue of farmer suicides in India, which occur at the approximate rate of about 1,500 per annum and represent 11 per cent of the total number of suicides in the country.
Subsidies exist everywhere
Farmers are the holy cows of every country. They are the recipients of quotas, subsidies, and tax benefits not just in India but also in Europe and the U.S. In fact, benefits extended to the agricultural class in the West are significantly more than in India. According to a World Trade Organization filing, India’s total farm subsidy stands at $56 billion; this caters to approximately 120 million Indians who are engaged in full time or part-time cultivation.
In contrast, the U.S. pays out an average farm subsidy of approximately $20 billion to some two million farmers, ranchers, and other agricultural workers; the European Union pays €58 billion to its agricultural class that numbers slightly over 27 million. These numbers offer some perspective on the state of agricultural subsidies in India and where the focus of reform initiatives should lie.
Interestingly, studies into the causes of farmer suicide have not yielded any concrete results. It is usually found to be a confluence of pressures, of which indebtedness is a major but not primary factor. In a 2014 study, a prevalence of three factors accounted for almost 75 per cent of farmer suicides — land ownership of less than 10,000 m, excessive reliance on cash crops, and a debt of Rs. 300 or more.
The increasing vulnerability of this particular segment of farmers is a long story. In essence, however, the Green Revolution of the 1970s and early 1980s exacted a price in terms of soil salinity, fertiliser consumption, and water requirement. Farms that were not viable tried to get more bang for their buck by opting for higher yields through modified seeds and by growing cash crops. These were more expensive and susceptible to the vagaries of the market; if a crop failed, the burden of debt on a small farmer was enormous.
Small holdings stay unviable
Admittedly, the government has had several schemes for decades now to help farmers modernise their holdings. Unfortunately, the high initial investments required, in combination with negative incentives such as input subsidies (fertiliser, pesticide, water, electricity), have meant that small farms could not reap the benefit of these schemes and remained unmechanised, without micro-irrigation, and with poor crop storage facilities. Thus, small holdings continue to be unviable and the input subsidies that politicians eagerly announce do little to change this fact. In essence, government assistance does not usually reach the neediest segment. It is also a myth that frequent bank loan waivers alleviate the penury of small farmers. In fact, most small farmers have hardly any collateral, and also fail to satisfy other conditions to qualify for bank loans in the first place. As a result, they turn to local moneylenders who charge exorbitant rates of interest. As a 2012 government report revealed, 85 per cent of farmers who held less than 0.1 hectares of land had loans pending to moneylenders, while among those owning over 10 hectares, only 21 per cent resorted to borrowing from the unorganised sector. The methods that moneylenders use to recover their investment are legend, and likely the direct contributors to farmer suicides.
Living on the edge
The cumulative result of corruption, inefficiency, and lack of access to finance keeps small farmers in a high-risk category, where just a medical emergency or a marriage — even the poorest in India cannot abandon extravagant marriage ceremonies — can tilt the balance from borderline sustenance to debt, poverty, and suicide.
Though the local requirements may vary from region to region, agriculture in India is desperate for a complete overhaul. This cannot be done in isolation — if farmers are to be displaced from their lands, there must be alternative sources of income for them. In that regard, this government’s ‘Make in India’ programme is vital. If industry and manufacturing can absorb labour, with a little regulatory help, farm holdings can grow larger and become viable.
Yet, for industry to expand, it needs power and land. This is where the government’s efforts to reform land acquisition laws and improve the energy situation in the country interlock. Each sector carries part of the weight towards an eventual improvement in Indian agriculture and the lives of small farmers.
This is the set of reforms that politicians and the media need to be discussing, not the parasitic politics one has become accustomed to in this country.
