POLITICS

What Ails The Indian Farmer And What The State Can Do

The temporary silver bullet of loan waivers should also include borrowings from private lenders.

12/06/2017 4:39 PM IST | Updated 12/06/2017 5:09 PM IST
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Madhya Pradesh Chief Minister Shivraj Singh Chouhan and his wife Sadhna Singh busy with their cell phones during indefinite fast, on June 11, 2017 in Bhopal.

The chief minister of a state undertaking a peace-fast to counter the anger of farmers who are struggling for their existence is certainly absurd, but Shivraj Singh Chouhan in Madhya Pradesh had no other trick in his bag.

Chouhan's counterparts in other states would have stage-managed some other farce that could try to either divert attention or tide over the crisis, or announce a farm-loan waiver as Devendra Fadnavis and Yogi Adityanath did in their respective states.

Chouhan's gimmick is symptomatic of a deeper malaise, not just restricted to his state, but the entire country: an agrarian crisis that has been brewing for a long time. Everyone in the policy realm knows the reasons, because at some point in time India was sort of an example of agricultural best practice; but unfortunately the responses have been just stopgap and populist. Nobody wants to bite the bullet.

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Farmers showing their applications handed over to Madhya Pradesh Chief Minister Shivraj Singh Chouhan during his indefinite fast, on June 11, 2017 in Bhopal.

Waiving loans, although unavoidable to mitigate the present suicidal indebtedness of the farmers, will only postpone another crisis, should another crop failure happens. Immediately after this, the farmers would again need money to buy seeds, fertiliser, power and labour and they would go to loan sharks again. If the crop fails, either because of drought or flooding, they will be back in debt yet again.

Crop failures and bad debts happen because of unprofitable agricultural practices, poor farm outputs, poor land ownership, nonavailability of non-farm jobs, and most importantly, the overall rural distress, which in other words means poor rural living conditions. The crisis is just the manifestation of a host of underlying factors that originate from a lack of policy and overall neglect of rural areas that are home to two-thirds of the population.

It's bizarre that India, where indebted farmers commit suicide in droves, accounts for the second highest farming output in the world and is the largest producer of fruits and vegetables.

It's bizarre that India, where indebted farmers commit suicide in droves, accounts for the second highest farming output in the world and is the largest producer of fruits and vegetables. In terms of indicators that measure volume and scale in agriculture, it's among the first five countries in the world. And about 50 per cent of the people in the country are dependent on it.

The sheen of achievements ends there. A slightly closer look shows why the farmers are suspended between life and death despite such aggregate attainments. In every single crop, India's productivity is worse than comparable nations such as China and Brazil, and also developed countries such as the US and France.

In fact, India is nowhere close to the best in the world in any crop. It's indeed a leader in wheat production, but its farm output is a third of that in France. Similarly, the output of another staple, rice, is just half as that of China. The productivity also varies drastically within the country - for instance, Punjab produces more than twice as much rice as Bihar does per hectare. Clearly, even in good times, farmers in Bihar will be worse off than their counterparts in Punjab, or even Karnataka.

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Activists of Communist Party of India (MarxistLeninist) protest against killing of five farmers of Mandsaur police firing incident, at Madhya Pradesh government office in Kolkata , India on Friday, 9th June , 2017.

As India's green revolution of the 1960s and 1970s had remarkably demonstrated, it's modern farming methods and supporting infrastructure that improved productivity. High yielding seeds, fertilisers, irrigation, machinery and affordable credit - that were the hallmarks of the green revolution - are among the critical factors that make agriculture sustainable, if not profitable.

At the height of the green revolution, agriculture accounted for about 40 per cent of India's GDP as against about 13 per cent today. The annual agricultural GDP growth rate during the green revolution was 3.6 percent; but today, it's less than two per cent. What's more important is that during the high agriculture growth period, India's poverty also declined.

There's some merit in the argument that the impressive acceleration witnessed during the green revolution may not be sustainable now because of the low original baseline, and that there has been some soil degradation because of technology-intensive farming; however, what is unanswered in this context is how other Asian countries such as China have been able to continue their gains. This is where policy is critical.

Green revolution was State-funded. As Food and Agriculture Organisation (FAO) noted, quoting Indian agricultural economist Ashok Gulati, price incentives provided to farmers, the dynamism of the national research system and the availability of credit and inputs such as improved seeds, canal irrigation and fertilizers played critical roles. "The success of this coordinated approach demonstrated that even in a country as diverse as India, the government can play an important role in setting the agriculture sector on a high growth path."

Evidently, withdrawal of the State from such an active role - since the 1990s following economic liberalisation - is one of the reasons for the present crisis.

Evidently, withdrawal of the State from such an active role - since the 1990s following economic liberalisation - is one of the reasons for the present crisis. In the early 1990s, the annual agricultural GDP growth rate was 6-7 per cent, but by the late 1990s, when liberalisation took deeper roots, it fell to less than two per cent. The country never recovered from this slump.

Neoliberal ideology and agriculture don't go hand in hand because without state support it doesn't work. Even a free market US, which wanted to block India's food procurement programme at the WTO because it amounted to subsidy in its eyes, heavily subsidises its farmers. In fact, some times the US gives subsidies to even reduce production so that there is no glut and the crisis of falling prices of farm products that we regularly see in several parts of India. As Biswajit Dhar and Roshan Kishore noted in an article in Economic and Political Weekly, since the WTO was established in 1995, the US has more than doubled its production-related subsidies or domestic support. Its Farm Bill of 2014 in fact, gets back to the price support measures that it once argued as market-distorting.

To break the vicious cycle that Indian farmers are in, the State has to not only come back, but play a more intensive role than in the 1960s and 1970s because Indian farmers in perpetual crisis. Corporates, seed companies and loan-sharks won't help them because pursuit of profits would only imperil them.

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Madhya Pradesh Chief Minister Shivraj Singh Chouhan ends his fast by coconut water offered by former Chief Minister and veteran BJP leader Kailash Joshi, on June 11, 2017 in Bhopal.

It's only the State, and nobody else, that has to take responsibility with a new forward looking policy. It cannot be exclusive to agriculture alone, but should also encompass other aspects of rural life because general rural distress - poor health, water and sanitation, housing, nutrition, education etc - significantly contributes to the ongoing agrarian crisis. India needs to restore the old system that maintained the sovereignty of the farmers - Indian Council of Agricultural Research (ICAR) and the network of state level agricultural institutions spearheading research and development, scaling up technology and supporting farmers - so that seeds, fertilisers and loans don't kill them.

And more importantly, in the short term, the temporary silver bullet of loan waivers should also include borrowings from private lenders because they are the ones that really kill.

Here's P Sainath on the farm crisis.

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