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

MORE MARKETS, LESS GOVERNMENT
(Vidyasagar and Chandra, 2003, CSD,
NIRD). There is every possibility of
worsening condition of poor farmers
further with the emphasis on investment
through corporate contract farming.
Unless means of production is reoriented
in favour of producers and meaningful
employment and employability of
poor cultivators are ensured through
public sector initiatives for infrastructure
development and input and output
markets are regulated in the interest of
producers it will be difficult to rescue
farmers from the syndrome of distress
and despair leading towards suicides.
4. Policy Imperatives And Options
We have discussed a few dimensions of
agrarian crises rooted in the syndrome
of decelerating growth of agriculture
amidst rising costs and inadequate infrastructure
leading to deficient employment
and income for the livelihood of
rural workers specially small and marginal
cultivators and agricultural labourers.
It emerged from the analysis that
decelerating growth with inadequate infrastructure,
technological support and
institutional arrangements forced majority
of the peasants in the debt trap. Majority
of indebted households were from
the poorest lot in terms of size of land
possession and monthly per capita consumption
expenditure. However, rate of
indebtedness and amount of loan was
directly related with increasing size of
land possession and households with
higher MPCE. Contrary to belief major
amount of loan utilized were for capital
expenditure and current expenditure of
farm and non-farm business instead of
consumption purposes. However, significant
amount of loan was spent on essential
consumption expenditure, marriage
and other ceremonial occasions
also. Expenditure on education and
health was the least. So far sources of
loan were concerned with formal sector
- commercial bank remained the major
player followed by cooperative societies.
Moneylender was yet significantly present
in the rural borrowing market and
other informal sources, i.e., traders,
friends and relatives, professionals and
others were not different than moneylenders
with a few individual exceptions.
Institutional credit remained favourable
for increasing size of land possessions
but mostly in poor states. Banks remained
effective after nationalisation
until 1980s but its performance declined
significantly in late 90s. Per hectare
credit to agriculture was also declined.
Analysis suggests that the geneses of indebtedness
were rooted in continued
neglect of agriculture resulted in decelerated
growth syndrome. Declining investment
and inadequate infrastructure
acted as a drag on institutional and technological
transformation and modernisation
with ecological balance. Poor support
system for technological transfer
and updating, credit, input, insurance
and marketing with dependence on vagaries
of monsoon resulted in crop failures
and lower returns leading to misery,
distress and despair.
In this sort of syndrome, cultivators
were often not in a position to repay the
loan(s). They hardly sustained the loss
The central issue of farmers’ suicides is the debt trap.
Small and marginal farmers are not eligible for availing
institutional credit and crop insurance. Thus, they land at
the doorsteps of the usurious moneylenders
of face before the community and committed
suicides. Thus, most of the unfortunate
suicides were debt driven. Credit
needs have been grown considerably
over the time following commercialisation
and modernization. However, average
household borrowing in rural India
has not been excessive. Inadequacy of
institutional credit delivery network,
poor performance of credit cooperatives,
regional rural banks, and commercial
banks, to meet their farm lending
targets, and high cost of rural banking,
etc., have aggravated further (Radhakrishna,
2007). Consecutive failures
of governance (in terms of effective policies
and their effectual implementation)
were witnessed. Instead of correcting
aforesaid those lapses the economy has
been moving in a different direction in
the interest of the rich and corporate
sectors with a faster pace of reforms. Interestingly
despite symptoms of all the
negative indications against the poor,
contradictory policies for reforms have
been put in place with a lip service to the
poor. Unless poor producers are brought
in the mainstream of production, control
over the means of production and distribution
on sustainable basis this process
of marginalization, distress and despair,
which has emerged out sharply in the era
of reforms and globalisation of markets,
may not be checked. Lowering the rate
of interest on institutional loans and
Right to Work may have positive effects
subject to effective implementation
THE INDIA ECONOMY REVIEW
59