Steve Diver
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Date: Thu, 18 Jun 1998 13:22:10 +0530
Reply-To: devfinance@lists.acs.ohio-state.edu
From: "H.S. Shylendra" <hss@fac.irm.ernet.in>
To: devfinance@lists.acs.ohio-state.edu
Subject: DEATHS BY DEBT
An oft-quoted saying about Indian farmer goes like this:
'A farmer is born in debt, lives in debt and dies in debt'.
As if to prove the saying right there has been a spate of reported
deaths of farmers in India recently owing to debt burden causing
alarm and worries among policy makers, researchers, practitioners
alike. In the last few months about 200 farmers in the semi-arid
areas of the South Indian States of Andhra Pradesh, Karnataka and
Maharashtra have reportedly committed suicides to escape from the
clutches of the money lenders. The news has caught everyone by
surprise. Some investigations carried out have largely
confirmed these deaths. Indian Parliament and respective states
legislative assemblies have discussed the issue and have expressed
serious concern about the policy failures leading to such desperate
measures by the farmers. The incident also became an issue
in the recently held elections.
The farmers who have committed suicides are those who had taken up
cultivation of commercial crops like cotton and pulse requiring
huge cash investments on various inputs like seeds, chemical
fertilisers and pesticides. Unable to borrow from formal credit
agencies, most of them have been forced to borrow at high interest
rates from private money lenders also playing the role of traders
and suppliers. A major pest attack has led to a total failure of
their crops. Repeated use of pesticides purchased on credit at
huge costs from the traders also has not been of much help to them as
the traders are believed to have supplied spurious pesticides
dragging farmers into a trap. With crops failing fully, the
money lenders debt hanging like democles' sword and with no other
recourse to take many of these farmers have resorted to suicides by
consuming the same pesticide which could not come to their rescue
earlier.
The phenomenon which is repeating some what regularly of late has
raised several questions, while the authorities are busy doing damage
control through relief and crash policies.
* The suicide of Indian farmers who were known for their resilience,
some aver that it is an indication of a latent distress situation
caused by multiple policy level failures. Some view the deaths as
a consequence of growing alienation of households due to transition
of traditional joint family system into nuclear units with no
fall back arrangement under distress situation.
* At the policy level the major blame has been on the formal rural
credit instituitons, insurance agencies and the extension system.
Most of the farmers committing suicides have been forced to borrow
from private money lenders as formal agencies have failed to come to
their help in meeting their credit needs adequately; tenant farmers
being at a highly disadvantageous position remaining totally out of
the formal financial network due to requirement of collateral for
borrowing. Even those who were able to borrow from formal sources,
inadequacy of loans due to rigid scale of finance followed by
these agencies have been compelled to supplement their
resources from private sources of borrowing. Coupled with the
failure of formal credit agencies, the problem of the farmers has
been compounded by absence of any credible crop insurance policy.
Though for more than a decade an experimental crop insurance scheme is
being implemented, it has however proved to be highly inadequate in
helping the farmers to really overcome such distress and risky
situations. Moreover bulk of the farmers are also out of the
insurance scheme as the crops covered are limited and exclude all
non-formal borrowers for the purpose.
Adding to the misery was the failure of the extension agencies to
guide the farmers in proper use of chemicals which proved to be
a highly crucial pitfall in the whole affair..
* Another factor being held as the major cause for the deaths is
the growing nexus of money lenders, traders and pesticide
manufacturers luring farmers into their hold. The local traders
interested in pushing sales of chemicals, gives liberal
credit to farmers. In the racket the producers of spurious chemicals
are found to be very much hand in glove with the traders. The
necessity of using costly inputs in the desire to reap a bumper
harvest has easily pushed the farmers into the debt trap.
* The phenomenon has led to many policy reiterations and advocacy.
A popular demand is for waiving farmers' debt which of course is not
a genuine solution. There are suggestions for strengthening the rural
credit institutions and make them more responsive to the needs of
small farmers. Unless backed by flexible and innovative
methods the credit agencies will no doubt continue to flounder.
A major policy instrument being suggested as a solution is putting
in place a credible crop insurance policy. This would require
replacing the existing policy with a more effective one both interms
of its cost and and coverage of farmers.
Though apparently the deaths are related to the debt burden
there is a need for an impassionate understanding of the
phenomenon touching all its deeper socio-economic and political
roots lest it reoccur again.
Some References:
M Assadi, Farmers' Suicides: Signs of Distress in Rural Economy,
<Economic and Political Weekly> 33(14) April 4, 1998.
G Parthasarthy and Shameem, Suicide of Cotton Farmers in Andhrs
Pradesh, <Economic and Political Weekly> 33(13), March 28,1998.
S Harlankar, Harvest of Deaths, <India Today> 33(23) June 2-8,1998.
H S Shylendra
H.S. Shylendra
Institute of Rural Management (IRMA)
Anand - 388 001, INDIA
E-Mail: hss@fac.irm.ernet.in
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