AGRARIAN CRISIS IN INDIA

             Twenty years of economic liberalization have adversely affected Indian agriculture. This article presents the problems prevalent in Indian agriculture, its consequences and it also attempts to provide effective solutions for the same. One of the major features of the current agrarian crisis is that there has been a decline in trend growth rate of production as well as productivity for almost all crops from the mid-nineties. Further the value of output has been declining from the late nineties.

                  Lack of adequate credit supply, improper irrigation and other infrastructural facilities, excessive dependence of a large proportion of population on agriculture, poor returns on cultivation, failure to mobilize enough capital for investment in productive technology and high level of unemployment in rural sector etc. are some of the major problems which India faces today in agricultural development.  Moreover with greater globalization and liberalization, the farmer is being increasingly exposed to the uncertainties of the product as well as factor markets. Also the farmers are caught up in a “debt-trap” due to greater reliance on informal sources of credit at higher interest burden. The most prominent manifestation of this is the large number of farmer suicides taking place in the countryside in the past decade. The crop insurance brought by the government has also proved to be a failure.

                 The major reasons for the crisis are liberal import of agricultural products, cutback in agricultural subsidies, lack of easy and low-cost loan to agriculture, lack of public sector investment in agriculture, inefficient public distribution system (PDS) and minimum support price (MSP) and the introduction of special economic zones (SEZ).

                   The agricultural crisis is affecting a majority of the people in India. The farmers and others employed in agriculture are in deep distress and are struggling for their livelihood. Therefore the crisis of agriculture is a crisis of the country as a whole and so needs urgent attention. Solutions to the problem may include quantitative restrictions on imports, bold steps to implement land reform measures, subsidies to agriculture which were removed by the 1991 reforms should be restored, public sector investment in agricultural infrastructure should be increased and loans should be made easily available to even the poor farmers. Revival of PDS and revision of the policy on SEZs are other measures which should be implemented. Also care should be taken that no subsidies are inefficient and subsidy on power to agriculture should be combined with encouragement to use fertilizers, better techniques of production and good quality seeds. Education of the farmers about the new technologies and methods of production should also be taken up by the government.

             Thus the policy implication discussion calls for an emphasis on the larger crisis; that of low returns and declining profitability from agriculture and that of poor non-farm opportunities. Risk management in agriculture should address yield, price, credit, income or weather related uncertainties among others. Improving water availability will facilitate diversification of cropping pattern, but this should go hand in hand with policies that increase non-farm employment.

Availability of affordable credit requires revitalization of the rural credit market. It is high time that the government and the people realized that India can become a real “superpower” only when the vast majority of the people, especially the farmers in the rural areas, become prosperous and are really empowered.