Debt Noose

By: | Published: June 4, 2015 12:37 AM

A new report contends indebtedness may not be the primary reason for farmer suicides

The IMD’s forecast of a poor monsoon in 2015, after last year’s drought and unseasonal rains this year, has stoked fears of rising farm indebtedness, widely believed to be the chief cause of farmer suicides in India. The government, therefore, will be under pressure to implement “pro-farmer” policies—loan-waivers, hiking MSPs, etc—which run counter to the ethos of reforms. However, that might achieve little, given the role of indebtedness, as research by Brookings India shows, in farmer suicides may not be as comprehensive as perceived.

The Brookings report juxtaposes farmer suicides in Andhra Pradesh (AP) and Maharashtra, the two most farmer-suicide prone states, and in Uttar Pradesh (UP) and Bihar, two of the most backward states. To be sure, farm distress in UP and Bihar is unlikely to be of a lesser degree than that in AP and Maharashtra; yet, the number of suicides reported per 100,000 farmers was much higher, in the last two decades, in AP-Mahrashtra than in UP-Bihar. In AP-Maharashtra, 30% of all suicides were farmer suicides, while 5% of all suicides had been attributed to debt or bankruptcy. Further, given the debt burden—measured as debt-asset ratio—declines with increase in assets, it should be the poorer farm households (marginal holdings) that experience greater burden, and hence, deeper despondency over indebtedness. But 60% of the farmers who committed suicide in Maharashtra during 2002-2013 had four or more acres of land. Therefore, there could be more significant factors than just indebtedness—the report indicates poor health (mental or physical) as one—at play. Farmer suicides, thankfully, registered the sharpest decline among all demographic groups in the last five years. While the opposition will indeed rally around each case of farmer suicide, the government needs to bear in mind that increasing insurance penetration and irrigation cover, rather than hiking MSPs and waiving loans, makes for better policies (and politics, too).

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