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AGRARIAN CRISIS IN INDIA

INTRODUCTION
The agriculture sector in India employs more than 2/3rds of the country’s population.
Agriculture sector has increased in volume and stability, with that its internal dynamics
have also changed as a result of structural adjustment programmes initiated by congress
under PV Narsimha Rao in 1991. Although no new agricultural policy was initiated under
it, the 1990s saw growing commercialization and globalization of agriculture in response
to new fiscal and trade policies, which have led to the opening up of economy.
Due to the need for fiscal discipline the state is also keen to prune agriculture subsidies.
The suicides by farmers and discontent among them are an indicator of this trend.
Numbers of regional studies have illustrated the growing stresses associated with small
holder farming in contemporary India.
It was reported in a study that 70% of farmers are frustrated with their profession and
40% are ready to give up farming provided thy could secure another job.(Despande and
Prabhu, 2005). Main reasons being increasing debt, slow input growths, crop failures,
rising cost of inputs and trends associated with structural changes and the second
generation problems of Green revolution.
Historically, this is taken a norm in developing countries but a growing number of
scholars suggest that India is going through an “agrarian crisis”.
STRUCTURAL ADJUSTMENT PROGRAMMES(SAP) AND SHIFTS IN
AGRICULTURAL POLICY
SAP adopted by Rao government had two components:
1. A microeconomic stabilization programme to reduce balance of payments and
internal budgetary deficits.
2. Comprehensive programme of structural change of economy.
Following SAP a number of shifts were witnessed by the farm sector.
Due to globalization and green revolution furtherance of the path of technological
captilistic development inaugurated. Earlier stress was laid on food security, keeping
prices lowbased on social justice but with SAP there was a major shift in these policies.
Freeing of controls, move towards dependence on market forces and opening of economy
were the measures undertaken leading to freer import/export of agricultural commodities.
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Subsidies of farmers on water, power fertilizers etc. were seen as cause of high fiscal
deficits and were phased out. Controls on internal markets removed and exports were
encouraged so as to gain scarce foreign exchange to fill fiscal gap.
The four mainstays of old regime viz. input subsidies, issue prices, minimum support
prices and procurement prices were all reformulated and gradually phased out.
Private investment, agro industry and modern technology was encouraged in agri sector,
thus allowing more room for market forces.
This meant domestic concerns were to be less important and farmers encouraged to
produce for the international market.
Multilateral trading system in agriculture also had important consequences for Indian
agriculture. The conclusion of Uruguay Round of Multilateral Trade Negotiations, in
accordance with Dunkel text would inevitably change the structure of relative prices for
agric commodities in the world economy. Over the time domestic prices of inputs used
and outputs produced by Indian agriculture would move closer to world politics.
PROXIMATE CAUSES OF INDIA’S AGRARIAN CRISIS
It has been widely acknowledged in economic literature that successful structural
economic transformations are painful for agriculture in all societies. In India, the sudden
shift from Keynesian state led support to liberal policies changed the dynamics of
farming and resources dedicated to it.
1. Structural transitions in Indian Agriculture
 The Green revolution: had the collective goals of infusing dynamism in the
economy, increased self sufficiency in food production and propelling the rural
transformation. It was achieved through increased government subsidization of
credit, fertilizer and irrigation schemes, providing newly agricultural technologies
to small farmers. Within a decade India had achieved self sufficiency and by early
1990s its annual agri exports were valued at $5.7 bn.
By 1990s land productivity had saturated in most states after decades of
continuous growth. The green revolution had completely changed India’s agrarian
landscape and means of farming, the mechanized growth of single crops now
meant that traditional Indian agriculture had turned into ‘cash based individual
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enterprises’ reliant on large pools of cheap, institutional credit in order to catalyze

larger harvest.
 Economic Reforms of 1990s; Many state support mechanisms developed and
institutionalized in green revolution became dormant or were abandoned
altogether. There was decline in public investment in irrigation and water
management resulted in low profitability. Subsidies were shifted towards non agri
sectors. There was shift of focus of credit disbursement towards promoting
industry in urban areas. Between 1991-2004, in Maharashtra, Mumbai’s share of
credit leapt from 5% to 48% of state’s total allocation.
 Removal of tariff barriers and exposure of Indian agriculture to price mechanisms
of the world market. Proponents argued that such an exposure would benefit
farmers by enhancing market access for their agricultural products whilst
encouraging them to grow crops according to principles of comparative
advantage.
2. Pressures on smallholder farming
Second generation problems of green revolution contributed significantly to the
pressures faced by smallholder farmers.
 Indebtedness: it significantly contributed to agriculture distress. In Punjab 88.33%
of farm households were indebted (R. Padhi, 2009). Average debt per acre stood
1.15 lakh in some areas. In Kerala average outstanding debt of farmers was Rs
33,707. The problem is traced back to green revolution. The method of farming
promoted from late 1960s and still used requires significant capital investments
into inputs (seeds, agro-chemicals, energy). These are expensive e.g. annual cost
of planting the genetically modified crops high yielding variety of rice is around
$220 per hectare, whereas traditional varieties cost about only $20 per hectare.
With economic reforms it became difficult to obtain cheap institutional credit
resulting dependence on informal networks.
Other factors such as marriage or dowry also contribute in indebtedness of
farmers. Also, community support mechanisms have been eroded due to the
‘commercialization of agriculture and cross culturalism of rural and urban areas.’
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 Stagnation and uncertainty in farmers’ incomes: with the exposure to international

markets agriculture has become a gamble. Low incomes and high debts are
closely linked.
Reduction in incomes acute for those who have opted for export oriented
commercial crops. Due to removal of restrictions farmers have to face stiff
competition from imports/exports in the international markets.
Geographical unevenness of green revolution led to large interstate migrations
seeking to earn money in more subsidized states. Now such opportunities have dried
up leaving a huge surplus of agriculture labour in many states.
With little growth in industrial sectors to employ these marginalized farmers,
a large number of labourers share the remaining seasonal work, further reducing
average incomes.
 Environmental degradation: is one of the repercussions of the green revolution.
Large farms receive 95%off the state disbursed water subsidy after reforms.
Marginalized farmers forced to extract ground water for irrigation through bore
wells and expensive pumps. Such strategies are costly and require credit
availability. Hence resulting in low incomes. Reduction in the quality of soil has
also resulted in need for more fertilizers which the marginal farmers cannot
afford.
 Failure of government support prices: minimum support prices policies contribute
to inflation. There is a faulty criterion being used in estimation of MSPs. Only
supply side of crops taken into consideration whereas in case of surplus
crops/produce demand side should get primacy. Large farmer’s lobby gain major
benefits and sue to ignorance and other factors small farmers are victimized by
them. Overall there is a bias in favour of large farmers.
3. Farmer suicides
Farmer suicides is a recurring phenomenon in India that has increased over the years.
There has been a lack of access to institutional credit and subsidies to small and
marginalized farmers. The borrowing costs have also increased as farmers seek loans
from more expensive and often informal sources which result in higher levels of
indebtedness.
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Families continue to be victimized even after suicides. They are forced to sell their lands
and thus the problem lingers on to the next generations. It is also the reason for increased
dropout rates from schools among children. Such social stigmatization and reduced life
chances have been described as a ‘process of pauperisation.’ There has been a rise in
farmer suicides over the years. Maharashtra, Andhra Pradesh, Karnataka, Madhya
Pradesh and Chhattisgarh are the big five states where farmer suicides are a norm. They
account for over 2/3rd suicides and there has been a surge in the numbers over the years.
Now the need of the hour is to address this alarming issue by taking steps such as giving
microfinancial aid on a large scale and eliminating the lacunae in the process.