An agrarian crisis

Print edition : November 19, 2004

THE crisis in the agrarian sector in Karnataka was marked, in the years between 2000 and 2004, by a sharp escalation in the number of farmers driven to suicide by poverty and irredeemable debt.

Suicide by farmers had started in the mid-1990s. However, the early spate of suicides were largely confined to the poorer and drought-prone districts of north Karnataka. From 2000 the phenomenon spread to other parts of the State, even in regions of advanced irrigated agriculture like Mandya district.

Between 1996 and 2000, the total number of cases of suicide in the State by persons coming under the category of Farming and Agricultural Activity was 10,959 (Crime Records Bureau, Government of Karnataka). Between April 1, 2003 and October 21, 2004, as many as 852 farmers committed suicide (Department of Agriculture, Government of Karnataka).

The figure indicates only the cases reported. Of these, only 819 came up before the district committees set up to decide the compensation for the families of the victims. Of these, only 266 were declared eligible for compensation. The process of issuing the cheque of Rs.1 lakh to the family has been most tardy. Only around 225 cheques have been disbursed thus far.

The inability to repay large and mounting debts, primarily to non-formal credit sources such as moneylenders, employers, neighbours and others, was the primary cause of suicide in the majority of cases. The liberalisation of the banking sector from the mid-1990s has resulted in the reduction of institutional credit to the rural areas.

In Karnataka, for example, the proportion of commercial bank credit to agriculture went down from 26.1 per cent in 1985 to 15.8 per cent in 2001 (Reserve Bank of India, Statistical Tables Relating to Banks in India). The proportion of rural bank offices to all bank offices went down from 11.3 in 1975 to 6.7 in 2002 in Karnataka. Interest rates in the non-formal sector are very high and farmers who needed money for agricultural operations and subsistence found themselves in a debt trap when cumulative years of drought and crop losses rendered them incapable of repayment.

In such a crisis, if subsidies are withdrawn, then the costs of farming, and even of subsistence, become unaffordable. Media reports and studies conducted by independent researchers have cited instances of farmers who took their lives when presented with an electricity bill for a huge and unaffordable sum by the distribution company. The economic reform programme has identified the power sector as one of the critical areas for reform. Alongside moves in the direction of the eventual privatisation of power distribution, there have been increases in power tariffs that have increased the cost of cultivation and sharpened distress. In Karnataka, the average tariff went up from 81.30 paise a Kilowatt hour (KWH) to 249.9 paise between 1990-91 and 2001-2002.

The targeted food distribution system and the decision to cap the food subsidy have denied more and more people access to cheap food. While the decision by the present coalition government to provide 20 kg of rice and 5 kg of wheat to below poverty line (BPL) families at Rs.3 a kg is a sensitive response to people's needs, the government has brought down the total number of beneficiaries. Between August and October 2004 four lakh ration cards of "ineligible" beneficiaries have been cancelled, thus bringing down the numbers of BPL cardholders from 60,78,274 to under 57 lakh. The subsidy bill of the government has, however, gone up to roughly Rs.74.5 crores a month (inclusive of transportation). This translates into roughly Rs.900 crores a year, an allocation far in excess of the figure of Rs.300 crores, which the Finance Minister set aside in this year's budget for food subsidy.

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