The Finance Minister Arun Jaitely in his Budget speech (2016-17) expressed a nation’s grateful thanks to our farmers for having delivered food security to the country. Another Union Minister, the then Agriculture Minister C Subramanian openly praised farmers for having enabled the Green Revolution in the late 1960’s and for having staved off starvation for millions, especially after the two successive droughts of 1965 and 1966 and the wasteful war of 1965 when Pakistan sought to win Kashmir by force after our Chinese debacle in 1963. The PL-480 food imports from the US kept us from starvation and then CIMMYT/IRRI provided us dwarf high-yielding varieties of wheat and paddy, which needed higher doses of fertilisers, pesticides and much water but improved food production dramatically. Credit availability had to be increased and bank nationalisation was the easiest way out but one must give due credit to the ability of the farmers to master the nascent technologies and improve food availability for the masses. Hailed as the Father of the Green Revolution, the Agriculture Minister gave all credit to the farmers who took upon themselves the risk of adopting new technologies using new seeds and new techniques without any de-risking mechanisms or support from the government except for the sustained campaign for training, field-trails and supply of HYV seeds.

Between 1967-2016, dramatic changes have taken place in the agriculture sector. The tremendous government support and drive between 1967-1985, soon dwindled to a period of muted support for the sector between 1985 to 1992, when self-sufficiency had already been achieved. Thereafter, from 1992 to 2004, there was a period of benign neglect followed by a major push for agriculture with the doubling of agriculture credit in three years in 2004 (actually achieved in 2 years) with huge amounts of credit earmarked for agriculture in the Union Budget, thereafter. But in 1990‑1991, the first debt write-off of all rural credit up to Rs 10,000; was announced and again repeated in 2008 for electoral gains, with debt write-offs up to Rs 300,000 for agricultural dues of farmers. Both write-offs were politically motivated but led to electoral victories for the Congress. But the entire banking system took about 10-12 years to recover from the shocks of these debt write offs.

Game Changers

One very important step taken was the introduction of Kisan Credit Card in 1998 by the then Finance Minister Yashwant Sinha, to provide affordable and timely credit to farmers. It was merely a passbook, which gave continuity of crop loans for 3 years and saved farmers from the anxiety and uncertainty of securing funds every year. Today, the KCC is a chip-based card with five-year tenure (over the entire crop cycle of 2 bad years, 2 normal years and 1 excellent year). This single move empowered the farmers like never before and though it benefitted the big farmers, it is actually available for all farmers who have proper documentation of land records in their names and a credible history of stable banking relationships.

The UPA government also took another step, ostensibly to help farmers access credit on affordable terms and along with increasing directed credit volumes for agriculture every year, they started subsidising banks (through RBI/NABARD), to provide credit at the rate of 7 per cent interest to farmers from 2006-07 onwards and followed this up with a further 3 per cent rebate (from 2011-12) if agricultural dues were repaid in time. Some State governments like Karnataka, AP, MP etc, gave further subsidies to their farmers for on-time repayment of crop loans and farmers from these states now get credit at virtually 0 per cent rate of interest. But this pushed farmers to avail of cheap credit on very favourable terms and big farmers and Adtiyas/agents started taking huge loans and diverted them for fixed deposits or started money lending operations with extremely high rates of interest, repaid all dues in time and availed of larger crop loans in succeeding years. While the banks and agents were happy, overall food production did not get much boost as the small holder farmers were deprived of credit access (82 per cent of all land holdings are those of small holder farmers). The banks happily achieved their agricultural sector loan targets, but with funds diversion, agricultural productivity remained muted.

Stock Taking

The Indian agricultural production base has widened over the years and today, India is the world’s largest milk producer and the second largest in production of fruits and vegetables. Comparing our agricultural productivity with that of China, our crop productivity is low, ranging from 30 per cent to 70 per cent of China’s crop productivity in all major crops. Tragically, after the wide-ranging economic and banking reforms dictated by the IMF/World Bank from 1992 onwards, the agriculture sector was totally neglected and from 1995 onwards, over 3 lakh farmers have committed suicide and on an average one farmer commits suicide every 30 minutes. If this is not a true indicator of agrarian distress there can be no other index for the agriculture disaster that has been unleashed, since then. On the one hand, input prices, especially for seeds, fertilisers and pesticides have been increasing exponentially while crop prices are controlled for political reasons. Again, for political reasons, sugar prices are being propped up when cheap sugar can be available, locally and from abroad. The government lacks the guts to de-control sugar prices and take decisions on GM-brinjal and other GM seeds, while the US, China and even Bangladesh can take swift decisions to help benefit their farmers. Political lobbyists, without any shred of scientific evidence and lots of political backing, have held all farmers to ransom while the Government dithers from carrying out even field trials of GM crops due to doomsday predictions from lobbyists and so called environmentalists.

A decision taken by the then Prime Minster Atal Behari Vajpayee in 2002 permitting GM cotton, has benefitted Indian cotton farmers and earned the country over Rs 50,000 crore by way of exports and not having to resort to costly imports. From a net importer of cotton, India is now the largest exporter of Cotton and Yarn due to that one bold decision by our Prime Minister. If Americans and Chinese have not been affected adversely, why Indians are resisting these GM seeds? We need more such brave decisions on GM seeds of various crops so that our farmers can enhance their earnings. Farmers too, need to enhance the seed replacement rates and access better quality seeds with germination rates exceeding 90 per cent. The government should also come down heavily on fly-by-night operators who cheat farmers by selling seeds having germination rates of 20 to 30 per cent only.

Rural Indebtedness

Especially after the 1992 economic reforms, it has become difficult for the farmers to secure a decent income from farm operations as the terms of trade since then have squeezed the smallholder farmers who have an average land holding of about 1.4 hectares only. Farmers borrow largely from non-institutional sources (agents/big farmers/moneylenders) as they rarely possess documents relating to land ownership or land tax receipts in their names, as mutation of land holdings have not been registered for ages due to deaths/births in the family. These farmers are denied bank credit at subsidised rates, which are generally preempted by the bigger farmers. Also, women farmers and agricultural labourers are being denied classification as farmers although they cultivate/own small plots of lands and are also denied subsidised credit. So, the big farmers with access to institutional credit take cheap loans and on-lend the same to smallholder farmers at very high rates of interest (as per risk perception). Farmers take loans for seasonal agricultural operations and also to meet family/societal obligations like funerals, marriages, hospitalisation, children’s education etc. Farming being one of the riskiest of operations, insurance should be available to farmers, but most farmers avoid crop insurance and other insurance facilities. And if the monsoons have failed as in the last two Kharif seasons, then farmers fail to repay loans and with mounting interest dues, fall deeper and deeper into debt. Sometimes, farmers are reduced to being bonded labourers for generations due to past debt obligations. The Royal Commission on Agriculture, 1928, was colonial India’s effort to examine and report on the conditions of farmers and the famous phrase “The Indian peasant is born in debt, lives in debt, and bequeaths indebtedness to his successors”, was recorded therein. The Report examined the major causes of indebtedness of Indian farmers and it is distressing to learn that 88 years later, the basic reasons for farmer indebtedness, remain the same. Some of the reasons for indebtedness of Indian farmers are:

1. Low income
2. Poverty and lack of education
3. Unproductive and wasteful expenditure of loans
4. Inherited debts
5. Waste of money on litigations
6. Poor financial inclusion
7. Poor knowledge of banking facilities and services
8. Faulty money lending systems
9. Uncertain monsoons
10. Wasteful expenditure on social customs
11. Rising cost of agricultural inputs
12. Result of past indebtedness
13. Forced sale of mortgaged lands for non-repayment of dues giving rise to landless labourers
14. Exploitation by moneylenders
15. Growing poverty due to lost capacity as labourers
16. Discrimination in rural societies
17. Social unrest causing crimes and suicides
18. Rural societies divided into landlords (Haves) and landless agricultural labourers (Have-nots)
19. Growing problems of bonded labourers
20. Overall decline of the Rural Economy
21. Poor infrastructure as also poor socio-economic development parameters
22. Political exploitation as farmers are unable to select leaders wisely, due to avarice.

Aadhar Card and Mobile Phones

After the 1992 economic reforms, farmers have suffered and the weaker ones have no way out except to commit suicide. Debt write-offs are regularly touted as a panacea by various state/central governments. But, such announcements play havoc with the bank repayment cycles. Other steps like creation of RRBs and NABARD, revival of Co-operatives, 2007, various agricultural insurance schemes, especially the 2016 version, called the Prime Minster Fasal Bima Yojana (PMFBY) with very low and affordable premium rates (2 per cent for Kharif crops and 1.5 per cent for Rabi crops) would be a boost to the farmers and a good safety net for their risks. The efforts at promoting financial inclusion in utilising Jan Dhan Yojana, the Aadhar Card and the Mobile Phones are noteworthy and will be a boon for the farmers.

The new health insurance and accident insurance schemes and the micro-pension schemes are very important in securing financial inclusion for the farmers. The doubling of farmer incomes by 2022 is also very important if the net income is considered. There must be a mechanism to control the galloping input costs of farmers. At a National Seminar held by the Bombay Chamber of Commerce and Industry at Mumbai in November 2016, some comprehensive