[Dec 2007, Volume 4 Quarterly Issue] Pdf File size - The IIPM Think ...

MORE MARKETS, LESS GOVERNMENT
ture occupation. Encountering deceleration
resulted into lower farm income
and widening gap between agricultural
and non-agricultural income. Therefore
major challenge is not simply to attain
higher growth target in agriculture,
which has been projected at 4 percent,
but to include agricultural labourers and
marginal and small farmers participating
in the growth process effectively. In
order to make them to participate in the
growth process institutional, infrastructure
and technological constraints need
to be addressed on priority basis. This
sector by and large is dependant on vagaries
of monsoon and unprotected from
the risks of crop failures despite expansion
of significant network of irrigation.
Rising cost of cultivation, embedded
with insufficient infrastructure support
and slowing down of employment and
income, left farmers trapped in the syndrome
of indebtedness and despair. Performance
of agriculture remained dismal
with some minor exceptions, thanks
to the unpredictable monsoon and governmental
indifference towards this sector.
As a result, employment in rural
sector grew at declining rate (Bhalla,
2005). Data from NSS rounds suggest
that there was significant decline in employment
in primary sector for both
males and females (NSSO, 60:506).
Findings are supporting the apprehensions
that National Rural Employment
Guarantee Scheme with this speed cannot
deliver the jobs to rural workforce,
.as implementation reports from different
states is adding frustrations only.
Another disturbing factor is decelerating
real wage rates in agriculture and nonagriculture
(Sharma, 2005). But the
question is whether these were substantial
to offset the decelerating impacts of
primary sector on the income of rural
economy. Decelerating growth rate suggests
that this sector could not generate
sufficient capital and investment even
through private sector. Limited benefits
of expansion of the post -Green Revolution
technology could increase production
and productivity but that also could
not be sustained. Moreover, the gains
could not be transferred significantly to
the rural poor in particular and farm
sector at large in general. Rather due to
lack of effective infrastructure and extension
services, modern technology
added confusions in absence of effective
extension services, increased cost of production,
and created environmental
complications and imbalances added
with greater intensity of exploitation of
poor farmers through usury network of
non-institutional credit market in absence
of effective institutional credit
support.
2. Indebtedness, Credit Markets
And Institutions
Rural indebtedness is an indicative of
deficiency of rural income to carry out
necessary activities for livelihood support.
Decelerating growth in agriculture
and increasing income gap between agriculture
and non-agriculture forced a
great majority of farmers and agricultural
labourers to borrow. Findings of
the Royal Commission (which stated
that 'farmers are born in debt, they live,
die in debt and transfer debt liability to
next generation') still hold good. The
worsening state of farmer's despair is a
matter of serious social concern. In order
to address the deficient need of the
farmers many players – formal as well as
informal - have been operating in the
credit market. NSSO survey report suggests
that about 48.6 percent of the farmers’
households were indebted with an
average outstanding loan amount of
Rs.12,585. Out of indebted farmers
households, 31.3 percent were from the
category of landless and below marginal
farmers, 29.8 percent were from marginal
farmers and 18.8 percent from
small farmers category. Thus, altogether
80 percent of the indebted households
were from the poorest lot in terms of
land in possession. Prevalent rate of indebtedness
of landless labour households
of rural area were 45.3 percent,
About 48.6% of the farmers’ households were indebted
with an average outstanding loan amount of Rs. 12585.
Altogether 80% of the indebted households were from the
poorest lot in terms of land in possession
who owed on an average Rs.6,121. With
the increasing size of land in possession
prevalent rate of indebtedness increased
and so was the amount of loan. Considering
per farmer loan amount by Monthly
Per-capita Expenditure (MPCE), extent
of indebtedness was higher in lower
consumption bracket. With the increase
in monthly per capita expenditure percentage
of indebtedness decreased.
However, amount of loan per farmer remained
positive with the increasing
monthly per capita expenditure. Indebtedness
by social groups suggest that
spread of indebtedness and loan amount
THE INDIA ECONOMY REVIEW
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