Apr 2008 Edition

Farm Suicides and Electoral Populism

As could be expected in an election year, the 2008 budget does much to appease key vote banks of the ruling coalition. While an adjustment of the tax brackets was long overdue, the extent of readjustment was indeed somewhat unexpected. And unfortunately, much of the Indian media failed to observe that this tax reduction has come at the cost of a 23% reduction in capital expenditure. In an essay titled "Politics, Smoke, Mirrors and a bit of growth" in LiveMint, Manas Chakravarty explains how this essentially means that government spending on infrastructure will decrease drastically from the previous year.But in a year when expenditure for urban development is down to a measly 2400 crore, the finance minister has seen fit to provide an unprecedented "60,000 crore" write-off of agricultural loans for India's peasants. (Education spending remains below  3% of GDP and health spending a paltry 1.4%.)

But to avoid alienating other voters, no taxes have been raised to compensate for this unsurpassed largesse. India's tax-payers will foot the bill only indirectly through a substantial rise in government debt. Notwithstanding the merits of such financial jugglery  (or the crudely evident vote-buying intentions that lurk beneath the grandiloquent utterings of  government bigwigs) - one must ask - was this the best or only solution to the crisis that has beset Indian agriculture?

First, it should be noted that this debt write-off does nothing to eliminate the debt owed by many small farmers to private loan sharks, since many of India's poorest farmers don't even qualify for government loans. In fact, since the loan write-offs will make it much harder for rural credit cooperatives and banks to recover their loans in the future, it may lead to many small rural banking entities to go under, pushing even more small farmers into the clutches of  private money-lenders.

Others have pointed out that while farmers in some regions (such as Bundelkhand or Maharashtra) that have suffered from extreme drought or floods  merit such loan waivers, farmers with some personal assets and the ability to pay off the loans (in better-off states like Punjab and Haryana) have also been included in the scheme.

Critics (such as Prof. Thingalaya) have also rightly noted that such unconditional and sweeping write-offs alienates those responsible farmers whose land-holdings may be just as small (or smaller) but who through their diligence and discipline managed to pay off their loans and avoided the bad habits or fiscal recklessness that may have partly contributed to the plight of the more indebted  farmers.

For instance, the government could have made the write-offs conditional upon farmers committing to family-planning schemes and promising to send all their children (especially girls) to school for a minimum of ten years. The government could have insisted that farmers seeking new loans would have to abstain from tobacco and alcohol and unaffordable wedding expenses. The loans could have been  given  in lieu of farmers committing to participate in any  local adult-education, community health  or agricultural/financial training programs (if such programs were available). The government could have mandated that only farmers who registered with their local KVK (Krishi Vigyan Kendra) and participated in their community education programs would be allowed the benefit.

While it is morally enlightened to write-off loans of farmers who may have suffered due to the vagaries of bad weather or circumstances entirely beyond  their control, it is quite another to excuse or encourage avoidable irresponsibility.

But of course, had the government offered a more targeted scheme or attached even reasonable conditions to its loan write-off scheme, it would not have been seen by the farmers as an electoral bonanza and would have thus failed to deliver the expected votes. The nation will thus give away 60,000 crores, and mostly without any sociological, or structural, or educational, or scientific, or technological, or infrastructural improvements. There will be no discernible improvements in agricultural productivity - not in crop production, post-processing, storage or delivery.

Besides, there are as many millions of  equally poor (or even poorer) rural and urban landless who will get no relief but will end up partially subsidizing this loan write-off through the excise taxes they will have to pay in the future. But since it is most unlikely that they will pick up on such financial jugglery, the government will likely escape any backlash from such voters at the polls. And since no political party will wish to look "farmer unfriendly", such tricks by the ruling coalition will probably go unexposed.

If anything, it will lead to more competitive populism. Parties will now demand that greater concessions be given to farmers with still larger land-holdings. Indian agriculture will remain in a morass while politicians will play to the gallery by screaming for more free power and more free water and more free loans. And the unsubsidized (but highly productive) sectors of the economy will hunker down and work even harder to support such political largesse.

Of course, India's bleeding heart liberals will ask - but what is the answer? We can't just let India's poor farmers keep killing themselves. To care for the unfortunate is indeed a very noble sentiment, and had this scheme been targetted at the truly needy without an eye on the elections there would be no need for any cynicism.

But it needs to be said that it is a great pity that India's liberal media has not shed as many tears for the millions of urban poor who also kill themselves day after day. When a poor house-wife kills herself in desperation (when the sole breadwinner of the family dies or becomes infirm or is unable to find work) our liberal media does not report it on the front page, and politicians do not call for a nation-wide household relief program. When a property-less  urban worker gets discouraged from lack of work and commits suicide, there are no calls for nation-wide unemplyment relief for India's poorest workers. When young girls are sold into prostitution or forced into exploitative marriages and kill themselves, there are no calls to set up a fund for more womens shelters or womens support groups. When dalits are driven to suicide by hostile dominant castes in villages, there are no calls for grants to rehabilitate the victims. When young students from lower middle class urban families commit suicide due to poor grades or exam failures, there are no calls to reduce the pressure on such children or for the government to intervene with a write-off of student loans.When  young couples in love commit  suicide because their immediate families won't tolerate their love there are no calls for the government to grant such couples interest free loans to resettle somewhere safer.

Unfortunately, India's liberal press has been very selective in reporting suicides in the Indian population. As a consequence, India's bleeding heart liberals have few tears for many struggling Indians who might perhaps be even more deserving of government attention. This is not to say that any government should be cold-hearted or indifferent to the problems of any community that is in distress. But throughout human history, there has been immeasurable human misery that remained unaddressed for centuries due to the administration of ineffective or false remedies.

For centuries, life expectancy in the planet was fairly low. People died of now curable diseases because human society's knowledge of the human body and disease was minimal and very incomplete. People who fell seriously ill sought the intervention of priests and witch-doctors who routinely failed to cure them. It is not as if people in earlier centuries didn't care, they just didn't know any better.

With the advance of science, humans are living at least twice as long (if not longer). Science has revolutionized human health.  But when it comes to the problems of agriculture, much of the world - and especially India has been in the grip of quack ideologues. From right-leaning liberals to Gandhians and Maoists, Indians of varying political leanings seem philosophically united on one point: that the individual farmer is sacrosanct. There is an almost incomprehensible romanticization of the small farmer, who is treated with a curious reverance that brooks no truth telling. This farmer could be addicted to alcohol or tobacco, could be a gambler, or backward on caste, gender or ecological issues, but Indians from across the political spectrum will still rush to his defence. For most Indians, the poor Indian farmer can never be anything but the saintly victim of a hostile world. That in some cases he may be an active agent or (more often) a passive abettor of an unsustainable social system that may need to undergo serious reforms would never occur to them.

According to the finance minister  40 million farmers are likely to benefit from the scheme. While some of these farmers have been victims of  unexpected weather-related (or other) disasters such as pest attacks (or victims of touts who sold them spurious agri-inputs), a signifiant proportion of  these 40 million farmers have been chronic defaulters. This suggests that there is a much deeper structural problem that lies at the root of farm loan defaults. In part, this has come about due to farming practices that have depleted soil fertility and overused underground water resources Without a comprehensive study of the situation in its entirety and an evaluation of the long-term efficacy of such loan waivers, it would be foolish, even reckless, to posit such schemes as  real "solutions".

No modern nation has progressed by artificially propping up the failing farms of the poorly educated (or uneducated) small peasant. This is not to say that the one ought to be cruel to the poor and less literate. But there are many different ways of being kind. One of the most effective ways to be kind is to bring about structural changes that would enable the small peasant to be transformed into a more productive and socially advanced member of society. It is one thing to be charitable towards those who might be victims of unexpected disasters but it is foolish to repeatedly subsidize am increasingly unsustainable order.

 For more than a decade, successive governments have gone through the rigmarole of announcing various schemes to ameliorate the plight of the Indian farmer. Each time, thousands of crores of public money is diverted from the cities to the villages - only for the government to have to come out with bigger bailouts a few years later.

Every year, India's self-styled agri-pundits engage in pompous hectoring about what needs to be done. India's politicians join in by issuing fervid calls for more attention to the plight of the small farmer. Budget allocations are increased. New schemes are floated. But Indian agriculture simply passes from one crisis to the next.

Part of the problem is that there are too few genuine experts in the field. When it comes to agricultural policy, far too often, ideology masquerades as "expertise". Economists, social workers and politicians  - all without any real  understanding of geography, ecology, science and technology or rural sociology  attempt to posit "solutions"  with little to show for  their pious pontificating. None seems to be serious about actually studying the issues in detail  (and without preconceived bias).

Depending on their political stance, activists and politicians magnify the impact of some factors while minimizing the impact of others. Few "experts" have comprehensive statistics to back their assertions nor are they interested in scientific data gathering. To date, there have been no calls for a proper district-by-district survey of agricultural productivity in India . Nor are there any detailed profiles of debt-defaulting farmers.

Government banks and credit unions haven't undertaken comprehensive surveys, and nor have India's most influential academicians called for any. Although government agencies such as the  NSSO do conduct annual surveys, their questionnaires are superficial and often elicit vague and dodgy answers. Those conducting the surveys are poorly trained and often lack the motivation to seek out the whole truth.

For instance, so far, almost no survey has sought to co-relate the educational achievement of farmers with their productivity or indebtedness. One expects modern-day doctors to have a medical degree. One expects engineers to have an engineering degree. But no politician or social worker in India expects India's farmers to even be literate let alone possess agricultural diplomas. Imagine if our hospitals were all populated by nurses and doctors without qualifications or our factories populated by engineers and technicians without degrees or diplomas. Would we be surprised if patients kept dying and factories produced things that didn't work or kept breaking down? Would we keep subsidizing such hospitals and factories?

When students apply for college loans they must pass some very difficult exams and meet fairly stringent qualifying norms. But when it comes to farmers, Indian society doesn't even expect them to be sober. As a consequence there have been no surveys to co-relate the productivity of farmers with drinking habits or other addictions.

There are no surveys to track the productvity of farmers who participate in programs organized by KVKs (or progressive agri-NGOs) versus those who don't bother. There are no surveys to track the productivity/indebtedness of farmers with their attitude towards gender and family planning. There have been no surveys to track the lives of farmers who come from large families versus those who grew up in small families.

While  farmers cannot be blamed for circumstances beyond their control, they can be at least partially held responsible for their own actions. If one farmer has just one child and sends that child to school
and that child inherits a larger plot of land to farm, sheer common sense suggests that such a child is likely to do far better than an illiterate child with ten siblings who is left with only a very small plot to cultivate. But for all political parties and farm advocates, the very real problems of rural illiteracy, over-population and land fragmentation are simply non-issues.

Likewise, more than a few anecdotal reports speak of the growing peer pressure on farmers to spend more and more on marriages and other community functions. Throughout the country, small farmers are under great pressure to spend ever-increasing ammounts on various family rituals and social ceremonies, and even dowry. But there has been no survey to co-relate rural indebtedness with dowry demands or other such social demands.

Since rural banking entities could hardly provide loans to cover dowry demands, such issues  generally remain hidden from most loan officers.Consequently (in many cases), a loan write-off would only be a temporary palliative because the structural inability of the small farmer to pay back any future loans would remain. The combination of higher social expectations, generational land fragmentation and low productivity will keep driving the small farmer into cycles of growing indebtedness.

As long as farm productivity remains stagnant and low, bailouts would then be endemic. And the price of such bailouts would be a crumbling urban infrastructure and a heavier tax burden on the urban workforce.

And yet, there is a fairly obvious solution staring us in the face. As recent economic growth has shown, India's best-managed corporations are rapidly adapting to globalization through productivity enhancements. With a growing pool of scientists, engineers amd managers to choose from, India's best-run corporations are going head to head with their multi-national counterparts. Cities with the nation's best colleges and universities are enjoying an unprecedented economic boom. And this boom has not required subsidies of the enormity of India's agricultural largesse. While the role of corporations has been tacitly accepted in virtually all productive sections of the economy, there has been a curious phobia when it comes to allowing Indian corporations into the agricultural sector. But with a grant of 60,000 crores it is hard to imagine Indian corporations doing worse than India's small farmers.

Imagine if the government had instead given a grant of 60,000 crores to India's leading agri-businesses so thay they could take over the farms of India's habitual farm defaulters with the sole condition that they would only be able to lease the land for ten years and in that period they would have to guarantee a minimum inflation-indexed dividend to the farmers.  It isn't hard to imagine that farmers would end up with more to spend each year and the nation's agricultural output from such marginal fields would double or triple in less than a decade. After ten years, it would be up to the farmers to renew the arrangement on a mutually acceptable basis. Further conditions stipulating norms on maintaining soil fertility and ground water depth could also be added so that if the land was returned to the farmer, it was returned in a condition no worse than when it was originally leased.

In a densely populated water-scarce nation like India, successful farming requires the application of the very best modern techniques discovered through decades of scientific research at the world's best agricultural universities. It might also entail utilizing the best that traditional knowledge systems (developed over centuries) in India might have to offer. While corporations have the ability to hire the best-trained or most knowledgeable experts who could rapidly absorb and implement such best practices, the illiterate or semi-literate farmer is appearing to be more and more incapable of doing that. For instance, research at UC Davis has demonstrated that by digging deeper beds, crops can be planted much closer than previously thought efficacious. Productivity of land can be greatly enhanced through parallel cropping (planting complementary crops side-by-side) and by growing multiple crops throughout the year. For rain-fed lands, it takes much more innovation and capital investment (such as in drip irrigation) to grow more than one crop a year. Corporations can do this, poor individual farmers can't.

For instance, for many years, UP's sugar mills were in the doldrums - until recently, when co-generation and technological modernization allowed the successful rehabilitation of sick sugar mills. Throughout India, there is massive energy potential in agricultural wastes. Corporations can exploit this potential. The illiterate small farmer cannot. Likewise corporations could invest in local seed banks, bio-fertilizers and bio-pesticides, They could engage in animal husbandry, bee-keeping or grow medicinal crops, and invest in cold chains and food processing and packaging in the most optimal manner.

With improved ability to raise capital, purchase agri-inputs and market farm output (and to rotate crops in accordance with fluctuating demand and supply cycles) corporations hold many advantages over individual small farmers. Corporations (through effective crop insurance schemes) could also withstand the vagaries of advers weather conditions with greater resilience.

If small farmers were guaranteed jobs and/or income and made legitmate stake-holders as share holders or lease-holders with dividend guarantees, all sides could potentially benefit. Small farmers could continue to keep their dwellings and possibly even plots for kitched gardens or cow-sheds while agri-corporations could multiply agri-productivity through the utilization of the most modern scientific tools and resources (including farm machinery and computers).

In the long run, this would also result in beneficial sociological changes in the countryside. While the Indian corporation is no panacea for caste or gender discrimination, corporate India has been far more open to qualified women and skilled personnel of all castes when compared to the Indian village. Moreover once Indian agriculture became productive and self-sustaining, there would be no need for endless subsidies and government funds could be spent where they are most needed - for social welfare schemes for the poorest - in both urban and rural India - and for developing infrastructure which is currently a most urgent need.

India is truly at a historic crossroads. It can continue to subsidize the hapless and miserable existence of the illiterate or semi-literate small farmer or it can open up Indian agriculture to Indian corporations in a wise and judicious manner. If it is done while protecting the basic and fundamental rights of the small farmer, it could liberate both the small farmer and his non-farming tax-paying Indian brethren from a cycle of unproductive dependancy and malaise.

But for this, politicians will have to be more courageous and many will have to discard their ideological blinkers that have created an irrational phobia concerning corporate entry into Indian agriculture. It has been 60 years since independence. If India's small farmer still cannot survive without repeated bail-outs, then logic dictates that entities with better knowhow and means be given a chance.

If nothing else, the government could at least set up model demonstration farms in each district where interested corporations could tie up with agricultural varsities, crop research stations, KVKs  and  knwoledgeable NGOs to demonstrate the viability of sustainable unsubsidized agriculture.

But business as usual spells only disaster for the nation - notwithstanding all the hype about India's emergence as an economic "superpower". If the government keeps spending crores on unviable farms and keeps starving cities of developmental assistance, India's future as a modern nation is doomed. One cannot be a first-world nation with third-world agriculture and third-world infrastructure.

India's intelligentsia needs to get over its mystical and sentimental attachment to the increasingly unviable small farm and instead lift both its rural brethren and itself into a modern era. It can be done with both kindness and ecological sensitivity.

Alternatively, if it keeps deferring  to ideological charlatans and political rogues in the guise of messiahs, India will never be able to extricate itself from this unending crisis. Judicious use of modern technology that is compatible with local ecology can liberate India's farms and cities, but for that to happen, India's progressive intelligentsia must stand up to the cynical politicos who engage in calculated vote-buying.

India does have the possibility of a future in which all Indians could live a life of greater dignity and enjoyment. Will we make it possible?

Related Articles:

Problems of Indian Agriculture

Human Development and Infrastructure in the Indian Subcontinent

Back for other selections from South Asian Voice for other articles on issues confronting India and the region.

Also see South Asian History or Topics in Indian History for relevant essays that shed some light on the history of the subcontinent.

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