Sunday, December 17, 2006

VIDARBHA AGRARIAN CRISIS-indepth report from Mathew Cherian,Chief Executive,helpageindia.


BY-Mathew Cherian

Chief Executive,helpageindia.


There are 1.7 million farmers in the six districts of Vidharba[1], and, since 2001, over 2,150 have committed suicide. Between January 1 and September 30, 2006, over 970 farmers ended their lives.[2] Worst of all, similar stories are being reported from Andhra Pradesh, Karnataka, Kerala and Rajasthan as well, and the phenomenon seems to be spreading to even agriculturally-rich states like Punjab.

Several in-depth studies have been carried out on the subject by reputed institutions[3], and many reasons have been cited for the malady. These include bad seeds, costly pesticide, drought, dumping of cotton by USA, low import tariffs, failure of MCPS and withdrawal of the state, declining public investment in agriculture, poor government agricultural extension and diminishing role of formal credit institutions. Blame is also being attributed to government, whose policies encouraged cash crops like cotton, developers of genetically modified crops, and dealers (who insist that farmers don't follow instructions for their seed).

The sad fact is that small and marginal farmers are increasingly being pressured with yield, price, credit, income and/or weather uncertainties. Getting a good price for their crop is becoming increasingly difficult. Cotton’s minimum support price averages Rs. 1,750 per quintal in Maharashtra. However, the cost of cultivating an acre of land, which yields 6 quintals on average, is around Rs. 10,000. Needless to say, small farmers are forced to lead a hand-to-mouth existence. Out of necessity, they are becoming dependant on the input dealer for advice (leading to supplier-induced demand) and on informal sources of credit with greater interest burden.

Studies in Vidharba show that over 80% of the farmers who committed suicide had less than 2 hectares of land and 98% had no irrigation facilities. Over 68% are said to have been the silent, introvert type, and 80% were between 30 and 50 years old. Around 85% are said to have had no bad habits, yet 86% were debt-ridden (31% had even mortgaged their land). Most were cotton farmers (66%), followed by those who farmed wheat (23%). Almost all owed banks, micro-finance institutions (MFIs) or moneylenders, between Rs. 20,000 and Rs. 80,000, and were paying interest in excess of 20% per annum to MFIs[4] or over 40% to local moneylenders.

Most suicide victims had either struggled with the long illness of a close family member or had a daughter of marriageable age (or just married off). Others faced the shock of sudden crop failure (or dramatic product price-drop). Yet others had pressure exerted on them by unemployed sons pushing them to get out of agriculture. All these are the ingredients necessary for deep depression, and a feeling of worthlessness, hopelessness and helplessness. With the joint-family fast breaking down, and traditional informal, village-level information/advise sharing systems (like the Chaupal and Chawari) disappearing, there are no social pressure-release valves in place to stop a deeply depressed farmer from taking the extreme step.

As stop-gap arrangements, the Central and state governments have periodically announced relief schemes, for example the recent Rs. 3,873 crore Central and Rs. 1,075 crore State Government packages for Maharashtra. However, farmers say these rarely, if ever, reach them (or the victims’ families) – a fact borne out by the steady increase in suicide rates (over 120 in Vidharba alone in September 2006).

Long-term measures

The long-term measures should broadly aim at reducing the risks in agriculture and increasing the net return from farming by improving land and labour productivity. Watershed development and development of irrigation facilities should be the main elements of this strategy. Development of viable non-farm activities suitable for the region and increased and effective public investment for improving the quality of education and health care are also necessary. There is a need for improving the scale and quality of vocational education and skill training in the region so that at least some of the young people could be made employable and shifted to the growing manufacturing and service sectors in the country. These are elaborated below:

The PM’s Package for Vidarbha envisages additional credit flow of Rs 1275 crore for 2006-07 to be ensured by NABARD and the lead banks. There is a need to continue this arrangement and to ensure adequate credit flow to the farmers.

Crop Insurance

It was found that small and marginal farmers were not getting the due benefit of National Agricultural Insurance Scheme (NAIS) as at present the Insurance Unit happens to be Taluka/Block rather than Village Panchayat. The variability in crop yield at the village level gets neutralized at the block level, so the farmers get deprived of the benefits of Insurance Scheme.

The Department of Agriculture & Cooperation has proposed implementation of Modified NAIS, which, inter-alia, envisages village panchayat as unit of insurance. As it involves huge outlay (Rs.8145 crores with 50% penetration), its implementation at the National level may be prohibitive. It may be possible to implement the scheme on pilot basis in select districts including some of the Vidarbha districts.

Social Safety Net

A system for setting up a jointly owned, Jointly Administered People’s Social Safety Fund needs to be considered. This could be a Contributory Fund with equal contribution for funds from farmers and Government. Government’s component for the Fund can be raised by levying a cess / tax on intermediate or finished cotton products. This could be worked out by a Special Committee under Ministry of Finance. The amounts could be used for welfare of the truly distressed. This will avert suicidal situations as like in SHGs it should be possible to take loans for marriages etc. Farmers contribution could be started as low as Rs.10 or Rs.50 per family as normal in SHG situations. The system could be federated at Tehsil or District level with the SHGs of farmers being around 15-20 per group.

Health Care

Ill-health leading to hospitalization has been noted as the second largest cause for rural indebtedness. Ill-health necessitates immediate financial expenditure and also results in loss of earnings from works. There is a need to deliver cost effective health care packages to the farmers. As the existing public health care facilities are inadequate and farmers invariably go for high cost private health care services, it is suggested that the State Government may take initiative in developing and implementing a public private partnership model in health care. The Government of Maharashtra may implement a scheme similar to the ‘Yeshavini Cooperative Farmers Health Scheme’ of Government of Karnataka under which 85 hospitals were selected based on set criteria and package rates were negotiated and fixed for over 600 types of surgeries. The package included all costs so as to provide for the beneficiary cashless surgical treatment. Premium per person is total at Rs.25/- per month which was given as subsidy by the Government in the first year. From the second year, the farmers’ contribution has been fixed at Rs.10/- per month. In Karnataka, 16 lakh farmers had enrolled as members in the first year.

Similar insurance cum savings scheme with a subsidy element needs to be developed to meet marriage expenses especially of girl children (with at least a 20 year duration).

The main issues at present.

  1. Suicides have now crossed 1600 deaths, and PM’s package is not working. Can state responsibility be fixed for acts of omission by the state leading to denial of livelihoods & hence the right to life/human rights of farmers? This is to be exmined in detail.
  2. BT Cotton in rainfed areas have been a disaster. Can there be any agro economic zoning to prevent predator companies?What Human Rights codes govern companies?
  3. Why is it that there is no price support mechanism and can Ministry of Agriculture take responsibility for the crisis? Can the fundamental right to life prevail over economic returns ?
  4. Can the Money Lending Act be imposed in furtherance of the right of the farmers to credit and moneylenders held responsible for charging interest above 24 % ?


  1. Analysis of secondary data available, existing studies, news reports & literature analysis?
  2. Examine existing legal framework to conclude whether it comes within the ambit of the constitutional provision on the right to life & Livelihood.
  3. Review the availability of data for the filing of a PIL as remedy.

[1] Akola, Amravati, Buldana, Yavatmal, Washim and Wardha in Maharashtra

[2] “Kiss of debt”, Special Report, Times of India, New Delhi, Sunday, October 8, 2006, page 8

[3] Tata Institute of Social Sciences (Mumbai), Indira Gandhi Institute of Development Research (Mumbai), Yashada (Pune) Center for Environmental Studies (Warangal) and the A. P. Government’s Commission on Farmers’ Welfare

[4] “Death by microcredit”, Times of India, New Delhi, September 16, 2006, page 30

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