blog 1The Centre recently informed the Supreme Court that despite a multipronged approach to improve income and social security of farmers, over 12,000 farmers have been ending their lives  every year since 2013.

According to the statistics available with the National Crime Records Bureau of India (NCRB), 5,650 farmer suicides have been reported in 2014. The highest number of farmer suicides was recorded in 2004 when 18,241 farmers committed suicide.  Farmer suicide rate in India has ranged between 1.4 and 1.8/100,000 population over a ten year period through 2005. According to the NCRB, in 2012, 135,445 Indians committed suicide, of which 13,755(11.2%) were farmers. Of these, 5 out of 29 states accounted for 10,486(76%)-Maharashtra, Andhra Pradesh, Karnataka, and Kerala. In 2012, Maharashtra with 3, 786 famers’ suicide accounted for a quarter of farmer suicides in India.   The causes attributed to suicide among farmers are:

  • Draught: as much as 79.5% of India’s farmland relies on flooding during monsoon season. Inadequate rainfall and resultant draught leads to crop failure.
  • Economic policies adopted by successive governments: Left leaning economists like Utsa Patnaik, Jayati Ghosh, and Prabhat Patnaik suggest that structural changes in the macro-economic policy of successive Congress Governments under PV Narasimha Rao, and Manmohan Singh that favored privatization, liberalization and globalization is the root cause of farmer suicides, though others contest this view vehemently. The other economic factor that is blamed to contribute to farmer suicide is demonetization recently enforced by Narendra Modi. The reasons why demonetization hit agriculture adversely are (1) declaration of demonetization coincided with harvest of Kharif crops, which the farmers faced difficulty in selling due to cash crunch. (2) The farmers faced extreme difficulty in sowing of Rabi crops, again due to acute cash crunch. (3) Unlike other sectors, farm output is perishable in nature, and hence less suited to withstand temporary adjustment to demand. (4) Demonetization created havoc to banks in the Cooperative sector, with whom farmers have been doing business traditionally and for considerable period in time. Their economy and wherewithal for daily existence were put paid to, consequently.   To add to the farmers’ woes, more perishable horticultural production (fruits and vegetables) exceeded food grain production by around 12% in 2015-2016. Demonetization hit the agricultural sector the hardest in many ways other than cash crunch. Agriculture in India accounts for 50% of the workforce. (5) The agrarian economy is cash based and village based. Farmers traditionally are incapable of availing digital services as they tend to be digitally illiterate. In many parts of India, framers do not have even a bank account. To make things worse for farmers, timing of demonetization proved to be highly damaging to the farmers. It came as a body blow following an above-average monsoon season, which the farmers were unable to cash in on due to the overnight implementation of the cash ban. Farmers were forced to sell their produce at abysmally low rates. (6) Even as the government celebrated a record production of food grain (273.38 million tonnes) and horticulture produce (295 tonnes) after two years of draught, farmers in general remained in doldrums. The community took to agitating in rising numbers, in several states against low price and growing indebtedness. (7)  Banks failed to exchange farmers’ old notes, or provide loans, a milieu ideal for avaricious local moneylenders to make hay by charging inhumanly high interest rates. To summarize, demonetization came as the last straw on the farmers’ back!


Farmer suicides almost became a daily routine in and around declaration of demonetization.

On November 22nd, 2016, a farmer in Telangana, unable to sell his land to repay outstanding debts killed himself and his family by adding pesticide into the family meal. Of the 144 recorded famer suicides post-demonetisation, over 40 were from outside the Cauvery delta region.  Tamil Nadu too witnessed her share of farmer suicide after demonetization, reported to be 17, according to the Chief Minister. Demonetization emerged the villain No.1 to throw spanner to the wheels of farmers’ wellbeing in India recently.

  • GM crops: the Bt cotton (Bacillus thuringiensis) cotton in central India, especially Madhya Pradesh is a case in point. Its seeds cost nearly twice as much as ordinary ones.  Higher costs had farmers avail larger loans often from private money lenders who charged exorbitant interest rates (60%/annum).  Unscrupulous money lenders had farmers sell cotton to them at prices much lower than the market price, causing severe economic crisis among farmers.
  • Tendency to live outside one’s means: This is especially true in a consumer society such as Kerala, where people trying in vain to meet both ends meet (a tough preposition amidst poor income), also splurge, often by availing loans!
  • Involvement of middlemen, who work in tandem with bureaucrats and politicians:

This has been an age-old scourge for which no effective treatment has been instituted for obvious reasons.



On June 1 of this year, farmers in Maharashtra went on strike for the first time ever. Angry farmers spilt milk and threw vegetables on the roads. Bandh was resorted to.

The agitation spread across many other states too like wild fire. Five people were killed in Mandsaur in Madhya Pradesh in police firing. Chief Minister of the state, Shivraj Singh Chouhan embarked on an indefinite fast to placate the farmers. Maharashtra too joined the loan waiver bandwagon.  Rajasthan is on the verge of calling a Bandh with the farmers not selling milk or vegetables an even boycotting public transport.

With Maharashtra also joining the arm loan waiver bandwagon, various state governments are expected to waive off $40 billion (Rs.2,57,000 crore), of farmers’ loan as a run-up to the 2019 general elections in the country, according to a global banking group. Farm loan waivers will amount to 2% of the GDP by the 2019 general elections, as other states are likely to follow the BJP’s governments in Maharashtra and UP, according to a Bank of America Merrill.

Wherever the farmers have been agitating, they’ve been demanding:

  • Loan waivers
  • Higher support price for their produce, and
  • implementation of Swaminathan commission recommendations

Geneticist Prof. Swaminathan, considered ‘father of Green Revolution’ had submitted its reports and recommendations in five installments from December 2004 to October 2006.  various recommendations put forth by the commission were: (a) to improve the quantity and quality of water available to farmers, (b) to enact land reforms like prevention of diversion of agricultural land and forests to corporate sector for nonagricultural purposes, (c) ensure grazing rights and seasonal access to forests to tribals and pastoralists (d) establish a National Land use Adversary service, (e) timely and adequate supply of credit by expanding the outreach of credit facilities system, (f) to issue Kissan Credit Cards to women farmers, (g) to establish an agriculture risk fund to provide relief to farmers in the aftermath of natural calamities, (h) to ensure availability of quality seed and other inputs at affordable costs, (i) fixing the Minimum Support Prices(MSP) for crops at least 50% more than the weighted average cost of production.

In the mean time, The BJP-led NDA at the centre chose to have the easy way out for a solution to famers’ suicides and agitations, such as those in Maharashtra and Madhya Pradesh recently- to waive off loans disbursed to farmers, instead of examining more viable and long-lasting measures like that of support prices for cash crops, which had to be raised at a war footing. Loan waiver which puts a huge yolk on individual states that choose to waive off loans is a populist measure that is extremely shortsighted and self-destructive in the long run. The Union Finance Minister minced no words in declaring that individual states will have to shoulder the burden of loan waiver, and that the centre is in no position economically to foot the bill. That had the states run helter-skelter for big money.

Take the case of Maharashtra as an example. The state is in a severe financial crunch. For 2017-2018, the estimated revenue deficit is likely to cross Rs. 4,000 crores. Excise revenue of the state has dropped by Rs.7,000 crores after the Supreme Court’s decision to ban liquor outlets beside highways. Implementation of the Seventh Pay Commission report for the state government employees will cost Rs. 31,000 crores. Ambitious infrastructure projects- the Mumbai-Nagpur superhighway (Rs.40, 000 crores), urban metro projects (over Rs. 1 lakh crore), and, to top it all, literally, the Shivaji statue off Mumbai’s coast (Rs.3, 800 crores) add to the bill. Against these expenditures, bridging over 31 lakh farmers back into the credit system would require another gargantuan Rs.30, 000 crores. Maharashtra is in trouble big time. It is highly unlikely that it would be able to waive off the farmers’ loans, as it has undertaken to, all by herself.

What about Uttar Pradesh? The state recently waived off Rs.36, 000 crores for 15 million farmers when Yogi Adityanath took over as Chief Minister to honor the poll manifesto on which the BJP rode to a spectacular victory. The UP government does not have the economic clout to bear this huge expenditure all by itself. It will need the centre’s munificence to meet its costly promise.

But in reality, it will be other states of the Indian Union which will be paying for UP government’s populist measure that helped its sweeping victory to the much-sought after seat of power.

How is that? The centre gets money in the form of taxes of various hues from the 36 states and Union Territories.

An average Maharastran pays Rs. 32,000/year as tax to the centre, while an average Gujarati and Tamilian pays about 20,000/year, while those in Uttar Pradesh, Madhya Pradesh,  Bihar and West Bengal pay only 6,000/year. The Centre, after getting these taxes keeps 58% to itself, while dispersing 42% to the states. For every Rs.100 an UP-ite pays to the Centre, he gets back Rs.200. A Bihari gets back Rs. 400, while a Tamilian gets back only Rs.34/Rs.100 paid to the centre. A Maharastran gets back only Rs.15/Rs.100. this arithmetic boils down to the fact that 4 states- Maharashtra, Gujarat, Tamil Nadu and Karnataka will bear the chunk of ‘nation building’, which means, it will be the other states which will be paying for mega loan waivers of others. Does it seem like a sure recipe that augurs for Indian federalism to the naïve? Far from it! It’s nothing but a slick Cunning to finance the NDA’s populist ‘magnanimity’ to capture power in all the Indian states ultimately. In other words- to rob Peter to pay Paul.

It is not the BJP government only which has resorted to farmers’ debt waiver with its eye on the ballot box. Other governments have waived off farmers’ loans, come election time, as this shortsighted policy is one among the favorite among vote-crazy politicians as a ‘vote poaching tool:

  • P. Singh Government: in 1990, the V.P. Singh government announced an agricultural debt relief scheme of up to Rs.10, 000 for each borrower, to honor the electoral promise he made.
  •  Manmohan Singh government in 2008 announced a Rs. 60,000 crore farm loan waiver under the ‘agricultural debt waiver and Debt Relief Scheme’ of 2008, the move which helped the Congress return to power in 2009.
  • Haryana (1987): Chaudhary Devi Lal, during the 1987 Haryana Assembly elections had promised to waive off cooperative loans under Rs. 20,000.
  • Tamil Nadu: Tamil Nadu has a long history of forgiving farm loans. In 1996, Chief Minister Karunanidhi assuming power, announced relief to farmers by waiving off 3% penal interest, which cost the exchequer Rs. 20 crores. In 2004, the Jayalalitha government waived off all farm loans availed from cooperative banks, which amounted to Rs. 61.05 crore. In 2006, the Karunanidhi government waived off all farm loans taken from cooperative banks amounting to Rs. 6,866 crores.
  •    Telangana and Andhra Pradesh: in 2014, TDP supremo Chandra Babu Naidu and TRS chief K. Chandrashekar Rao rode to power in AP and Telangana respectively on a popular promise of farm loan waiver. The cost was estimated at Rs. 43,000 crore for AP and Rs. 20,000 crore for Telangana.

According to official data, agricultural loan outstanding stood at Rs.12.6 crore as of September 2016, while more than half of the households engaged in farming are in debt, with an average loan burden of Rs.47,000; 52% of India’s agricultural households are in debt. While UP (has a debt of 4 lakh crores, the proposed farm loan waiver is Rs. 36,359 crore), while for Maharashtra: (they are Rs. 3.5 lakh crore and Rs. 30,000 crore respectively). For Tamil Nadu: (Rs.2.1 lakh crore and Rs. 8,000 crore) Madhya Pradesh: (Rs.1.24 lakh crore and Rs. 6,000 crore)Andhra Pradesh: (Rs. 1.4 lakh crore and Rs. 20,000 crore) Telangana:(Rs. 88,000 crores and Rs. 17,000 crores) Chhattisgarh:(Rs. 38,000 crore and Rs. 3,200 crores) Punjab: (Rs. 1. Lakh crores, and Rs.70,000 crores) Rajasthan: (Rs. 2 lakh crores. and Rs.70,000 crores) Karnataka: (Rs. 1. Lakh crores and Rs. 52,500 crores) Haryana: (Rs. 1.25 lakh crore and Rs.56,000 crores) respectively.

What if the government decides to waive off farmers’ loans? It will cost the nation Rs. 3 lakh crores, which is 2% of India’s GDP. The nation is undoubtedly reeling under a farm crisis. Waiving off farmers’ loan is only a quick fix solution and not a long-lasting approach. It was conveniently being used by political parties, of all hue and color, both at the centre and in the states for electoral gains, and has not served any good to ameliorate the lot of farmers in the long run. More than just the loan waiver, implementation of the Swaminathan Commission recommendation, especially that which called for fixing the ,minimum support prices(MSP) for crops at least 50% more than the weighted average cost of production would have relieved farmers’ economic travails in a more effective and long-lasting manner. The MSP was in fact incorporated into the BJP’s 2014 Lok Sabha elections manifesto. But, it has so far done best to remain just a manifesto, and a mirage for the farming community.


If Prime Minister Modi had really kept his promise to unearth and bring back black money to the nation, which according to the Director of the central Bureau of Investigation is slated to be US$500 billion in foreign tax havens (more than any other country), the farmers’ loan waiver could have been a cakewalk, without pinching the exchequer much. But, promises, unfortunately is a commodity to be made before the hustings and to be forgotten the very next day, win or lose, especially the former!