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How not to help farmers

How not to help farmers

Author: A Surya Prakash
Publication: The Pioneer
Date: April 8, 2008

Although the announcement of a debt relief package for farmers in the 2008-09 Union Budget has raised the hopes of the farming community, a good percentage of the 40 million beneficiaries may be in for a disappointment because of the inherent flaws in the Government's proposals. Considering the magnitude of the tragedy -- over 160,000 farmers have committed suicide in India in the last eight years -- and the material that was available with the Government in terms of research, data and expert advice, the proposal is shockingly devoid of comprehensiveness. The Government has come up with a policy that betrays ad-hocism, non-application of mind and insensitivity to the plight of farmers. All these negatives of course spring from that eternal weakness of politicians -- the cynical pursuit of political advantage.

For reasons best known to it, the Government has ignored the advice of experts while formulating this policy of loan waiver. For example, it had appointed a four-member committee headed by Mr R Radhakrishna to examine the issues that were driving farmers to suicide in different parts of the country. This committee looked at various facets of the problem and submitted its report in July 2007. Since the suicide rate among farmers is around 20,000 per annum since 1999 and since the mounting suicide rate in States like Maharashtra, Andhra Pradesh and Karnataka was a matter of concern for everybody, the delay of seven months to formulate a policy raises some questions. Why did the Government hold back announcement of the relief till February 29, 2008? Was political mileage via a budget announcement more important to it than the lives of farmers? The Finance Minister is correct in saying that the Radhakrishna Committee "stopped short of recommending waiver of agricultural loans", but that is only half the story.

The committee advised Government to come up with "risk mitigation strategies" if it wanted to see an end to this gory phenomenon of suicides within the farming community. It said indebtedness "is an important factor associated with suicides, but it is not the only factor". Farmers face multiple risks that reinforce each other. In addition to weather related uncertainties, farmers have to cope with the market, technology, spurious inputs and credit-related vulnerabilities. Therefore, the committee came to the conclusion that "in the absence of risk mitigation strategies the farmer is at the receiving end. Under duress some farmers end up committing suicide".

In other words, the Radhakrishna Committee suggested a holistic approach to tackle the problem, not a vote-catching gimmick. However, the Government's announcement has failed to take in the larger dimensions of the problem. The committee drew the attention of the Government to several factors that trigger suicides. For example, it examined the sources of credit and found that 40 per cent of the loans taken by farmers came from moneylenders, traders and such other non-institutional sources which charged interest rates of over 25 per cent per annum. In a good percentage of the cases, the interest rate was higher than 30 per cent.

Even more disturbing was the fact that in Andhra Pradesh, which reported a high rate of suicides, moneylenders, traders and such other non-institutional sources accounted for 70 per cent of the loans taken by farmers. The committee, therefore, advised Government to transfer private debt to institutional agencies. How can the debt burden of these farmers be lightened when the Government's announcement remains silent on this score? The second issue discussed by this committee related to the purposes for which farmers took loans. It found that farmers in States which recorded the highest rates of suicide borrowed money for productive purposes -- to buy seeds, fertiliser or pesticides or to dig wells, etc. Therefore, it said the policy of debt relief must take into account the regional variations. This advice has also been ignored. There is no region-specific solution in what the Government has offered. Incidentally, the need for such an approach has been highlighted by Mr Rahul Gandhi, general secretary of the Congress. He has said that there is need to localise cut-off dates so that deserving farmers get the benefit of the loan waiver.

Apart from the Radhakrishna Committee, the Government had insightful analysis and research from several experts whose papers were put together by the National Institute of Rural Development, Hyderabad, in a book titled Farmers Suicide in India -- Dynamics and Strategies of Prevention. This book, edited by Gyanmudra, compiles the views of several scientists and academicians who look at different aspects of the problem. Though these experts have provided valuable inputs, their opinions do not seem to have meant anything to policy-makers.

Another major flaw in the policy is that it makes no distinction between irrigated and dry land while fixing the size of land holding to determine whether one is a small, marginal or big farmer. Mr Gandhi is among those who have drawn the Government's attention to this lacuna. He has said, and rightly so, that there is need to raise the eligibility limit for land holding because the proposed ceiling of two acres does not take into account land productivity "and excludes farmers in poorly irrigated areas". It is strange how the bureaucracy, which is packed with members of the IAS, failed to make the distinction between irrigated and dry land. Every member of the IAS begins service in the districts and gets first hand understanding of land holdings, crop patterns, irrigation, weather conditions, indebtedness of farmers, etc. Yet, the policy has failed to take note of something as elementary as productive and non-productive land holdings.

Equally strange is the one time settlement offer for farmers with land holdings over two acres. When farmers are reeling under debt and committing suicide, how can they cough up 75 per cent of the outstandings in one go in order to get advantage of the waiver of 25 per cent?

We now have morbid statistics to show that the dance of death in rural India continues. At least 77 farmers have committed suicide between February 29, the day the Finance Minister made the announcement, and March 29. According to NGOs active in the area, many of them were driven to suicide because of their disappointment with the loan waiver scheme. The media in Andhra Pradesh and some other States continue to carry reports of suicides. Will this at least stir the conscience of the Government?

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