My Column for the DNA, last fortnight
Karnataka is the fourth,state to waive loans taken by farmers, and try and mitigate the agrarian crisis that has hit farmers. The other states are Uttar Pradesh, Punjab, and Maharashtra. The agrarian disquiet seems allayed, for now. However, this is not going to the be the end of the matter. At one level, you will see farmers from the remaining states agitating for the same end – after all, why would they continue paying off their debts when others aren’t. In these cases, we are not talking waiver of interest, we are talking waiver of the entire loan. While those farmers who have borrowed from the formal banking sector, are busy preparing to borrow more for the next season of sowing, those who have borrowed from the moneylender – at between 4 % to 10% interest per month – there is no relief. It is estimated that over 50% of small and marginal farmers, have pending debts with the local moneylender. So, as such, the loan waiver is doing nothing but buying time till the next time farmers protest, or the next time there are elections. There are fundamental structural problems with the Agricultural sector, and unless those are fixed, there will be more farmer suicides, more agitations, more waivers, all of which will lead nowhere.
As per the agricultural census. (2010-11), almost 85% of India’s farms are less than 2 hectares, and 67% of all farms in India are under a hectare. The average land holding, across all farm sizes, is 1.16 hectares. This figure was 2.82 hectare In 1970-71. . According to the state of Indian Agriculture 2015-16, In the decade that followed the turn of the millennium, marginal farm holdings went up from 75 million to a shade over a 100 million. While the medium and large holdings, fell And, this is possibly the starting point of the agrarian crisis. The size of farms is too small to sustain the farmer and the farmer’s family. And, it is likely that if the problem is not addressed, the size of farms will get even smaller.
Most of Europe avoided the fate of India, because of a very strict feudal law – that of following primogeniture – a system of inheritance by the first born (usually the first born son). All other offspring found other things to do; some moved to the city, some learned a trade, others migrated. While it was a harsh rule, the ownership of the land, in its entirety, passed on from one generation to the other, allowing productivity to rise.
In India, we have rarely believed in keeping land intact. Historically, kingdoms, farms, property, and even businesses, have split, to keep everyone in the family happy. While one is not saying that one should import primogeniture, there must be a way of preventing farm sizes from getting any smaller, at the same time as allowing the consolidation of farms into larger units. Unless this is done, no other reform is going to work. Farm sizes have to be consolidate to improve not just efficiency and productivity, but to give the farmer more than the bare minimum to survive. As per the Situation Assessment Survey (SAS) 2014, of agricultural households, a farm needed to be at least one hectare, for there to be basic operating profit. This operating profit is only possible because the farmer’s labour cost is not accounted for. If you add the farmer (and the farmer family’s) labour cost, there will be no profit.
India pays lip service to its farmers, while allowing a system that beggars the farmer, to perpetuate. To see a solution, the Government must bite the bullet and bring in land reforms, sooner rather than later. Else it will be stuck in this cycle of farmer distress, farmer suicide, farmer protests, and loan waivers.