Why the farmer suicide debate is counter-productive to understanding India’s agrarian crisis?
India’s political economy discourse is often a prisoner of the dictum that when there is no theory, there is a conspiracy theory. Corruption, rather than an accentuated cyclical shock after the global financial crisis, combined with the poor governance structures in Indian banks, is described as the main reason for the bad loan crisis. Reservation for socially deprived communities, and not the general deceleration in growth of quality employment, is described as a bigger culprit for the lack of jobs.
A similar approach is adopted when looking for points of evidence for economic and social trends.
In the discourse on agriculture, for instance, farmer suicides are cited as the biggest proof of the agrarian crisis in the country by a large section. While there is factual evidence to show that a large number of farmer suicides is indeed driven by economic distress (more on this later), citing these numbers has become an alibi of sorts for an in-depth analysis of the factors behind what is now a systemic crisis in India’s farms. The obsession with seeing farmer suicides as the be all and end all of the agrarian crisis in India has given birth to another extreme viewpoint, which seeks to dismiss the existence of the agrarian crisis by questioning the severity of farmer suicides.
A Bloomberg Opinion piece by Shamika Ravi, director of research at Brookings India and a member of the Prime Minister’s Economic Advisory Council, borders on the latter. “India’s farmers are doing far better than many realise”, the article says, citing the higher growth in rural sale of fast-moving consumer goods. Ravi also highlights that farmer suicides are a bigger problem in states with greater access to formal credit such as Maharashtra than the ones like Bihar, where money lenders hold more sway. She also argues that suicide rates among housewives are almost twice the number among farmers. While the facts used in the article are correct on a stand-alone basis, using them to discount the crisis in Indian agriculture is not. Here’ why.
Let us take the farmer suicide statistics first. The suicide rate (suicides per 100,000 population) among farmers and agricultural labourers has always been significantly lower than the headline suicide rate since 2001. This trend holds for almost all states. However, it is also true that economic distress (bankruptcy, indebtedness, poverty, crop failures, inability to sell their produce etc.) is a bigger cause of suicides among farmers in most states. This became apparent from the 2015 National Crimes Record Bureau (NCRB) statistics, which for the first time gave a reason-wise break-up of suicides in the country. These trends were discussed in detail in a 2017 Mint piece by this author. Unfortunately, the NCRB has not published these statistics for the period after 2015.
HT has compared state-wise suicide rates by farmers/cultivators (and not agricultural labourers) with per cultivator agricultural value added for 2015 to check the relation between farm incomes and farmer suicides. The analysis shows that states with higher farm incomes tend to report more farmer suicides.
The reason for this is not very surprising. States that have lower farm incomes are dominated by subsistence farming, where agriculture is mostly an enterprise to grow food for self-consumption. This is a low-risk, low-reward game, where both capital investment and expected incomes are low. In contrast, states such as Maharashtra, Andhra Pradesh, Telangana etc. have a large number of farmers engaged in commercial farming. This requires greater investment and hence greater need for credit. Such farming also involves producing crops which are directed more towards markets than the government’s Minimum Support Price (MSP) procurements. Therefore, farmers who are engaged in this kind of activity are more vulnerable to income shocks than their subsistence farming counterparts.
To infer that the subsistence farming states are better off as they have lower farmer suicides is to make a virtue of a low-income equilibrium trap in Indian agriculture.
The obsession with farmer suicides being the most robust indicator of farm distress is also a potential disincentive for state government to provide relief to farmers. A state government which diverts scarce fiscal resources to bail out distress-ridden farmers might lose out on a future central package which uses farmer suicides to decide allocations.
The epicentre of India’s agrarian distress lies in what Ravi correctly identifies as falling farm gate prices in a period of rising agricultural productivity and output. This is not a problem which lends itself easily to either sensational rhetoric like hundreds of thousands of farmers committing suicides or quick-fix solutions like farm loan waivers and a one-time hike in MSPs.