Thursday, June 15, 2017

Why Are Indian Farmers Poor?

Agriculture plays a very important role in India. The total acreage of India is 60% and the primary crops grown are wheat, rice and cotton. India is world’s largest producer of pulses and spices. It contributes 16% to the total GDP of India. Though the GDP share of the agricultural sector has declined over the years owing to the growth of service sector and the industrial sector, yield per hectare in spite of being significantly lower, has increased. In a country like India where the population is 1.3 billion, food security is a big issue and that makes agriculture even more important. Moreover, agriculture contributes to the 10% of the total exports of India. Hence, it is safe to assume that there is a correlation between growth in agriculture and the development of the nation.

Ministry of agriculture has signed MoUs with 52 countries for better agricultural facilities in research and development, food processing and plant protection among other areas. Apart from this, the government has recently taken some major initiatives in the areas of irrigation, crop insurance and land quality among others. With the target of doubling farm incomes by 2022, the government has set up an inter-ministerial committee which will look at the potential of growth of agricultural industry. Soil health cards which look at increasing productivity of farmland by recommending right crops for various lands have been provided to over 5 crore farmers till date. Prime Minister Krishi Sinchai Yojana (PMKSY) has been launched in order to provide water to every farm by 2017. Pradhan Mantri Fasal Bima yojna has been launched in order to provide crop insurances to farmers. Apart from already mentioned, there are a number of other schemes that have been launched by the current government to increase the productivity and to aid farmers.

Government schemes might sound really good on paper but the ground reality is something else. Every year thousands of farmers are committing suicides. The number of suicides is very alarming and reflects in how much poor condition Indian farmers are. The chart besides shows the number of farmer suicides from the year 2000. 

About 10,000 farmers commit suicide every year in India with Maharashtra and Andhra Pradesh accounting for 60% of them. The real plight of Indian farmers is that they are poor and are in huge debt. Let's try to understand why are Indian farmers in huge debt? Why are they poor?

According to agricultural census, more than 85% of the farmers are small farmers i.e. they own less than 2 hectares of land. 
·                     These farmers do not possess any capital and hence they are left with two options, first is to resort to bank and second is to seek help from money lenders. 
·                     While banks do offer lower interest rate, they are misused by big farmers. Taking a loan at lower interest and investing elsewhere for higher returns. 
·                     Also, loans are rarely given as per the size of the farms and the crop. 
·                     Moreover, issues of corruption and mismanagement also linger upon several banks. Thus it is safe to say that small farmer are excluded from this benefit. 
·                     In such a scenario, farmers tend to go to money lenders. Money lenders charge exorbitant interest. 
·                     Farmer left with no other option agrees to pay higher interest. Once the farmer has capital, he invests in his farm. 
·                     It should also be noted that the amount farmer needs to invest in his farms has risen over the years owing to the rise in labour cost and the rise in the cost of fertilisers etc. 
·                     Only about 35% of the arable land in India enjoys proper irrigation. The rest of the farmers hope for a satisfactory rainfall which owing to climate change more often than not does not happen. 
·                     Lack of adequate water supply thus results in crop failure. 
·                     Most of these farmers are in huge debt now. 
·                     They seek to avail their crop insurance which again takes huge time to pass. 
·                     Meanwhile, interest on the loan taken from money lenders continues to build. 
·                     At the end of the day, the farmer who arranged capital agreeing to exorbitant interest rates is left with very less production and incurs a loss. 
·                     Owing to inflation and the high cost of education, the farmer takes more and more loan from the money lenders just to survive.

Small farmers in India are trapped in this vicious cycle and unless and until they are brought out of it, they will continue to remain poor. 

 Origionally posted by: Hetal Patel

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