By Afsar H. Jafri, Focus on the Global South* India’s Prime Minister Manmohan Singh toured Vidarbha on 30 June and 1 July 2006 (he visited Dhaman Gaon in Amravati District, Waifed in Wardha District and Yavatmal) to know first hand the reasons for large-scale farmers suicides in the region. The idea was to announce a set of remedial measures to mitigate the escalating farm crisis that was leading farmers to take their lives. But despite a relief package of Rs. 3750 crores, it is unlikely that it will used to address the root of the problem. The number of suicides in Vidarbha has crossed 615 since June 2005 and there are no signs of abatement. However it is important to see whether the relief package can achieve the results in alleviating farmers’ conditions in the region and stopping farmer’s suicides.
The PM’s relief package is meant for only six districts of Akola, Amravati, Buldhana, Wardha, Washim and Yavatmal in Vidarbha. Though the other districts of Vidarbha and districts in Marthwada are equally affected by agrarian distress, they were ignored under the PM’s relief package and this could lead to a rise in farmers’ suicides in these districts. As an immediate measure, the PM announced a sum of Rs. 50 lakhs at the disposal of each Collector only in the 6 suicide affected districts of Vidarbha to be used judiciously for alleviating the distress of families affected by suicides and debt. This is indeed required to pay compensation to the victim families, provided it is judiciously used. However the Manmohan Singh package for Vidarbha is not a long-term solution to prevent farmers’ suicide in the region. Though he tried to deal with the problem by providing short time support but the increase in farmers’ suicide immediately after PM’s visit to Vidarbha indicate that this package is not enough to prevent suicides in this region and obviously not enough to deal with the current agrarian crisis. The key components in the PM’s package are debt relief for the affected farmers and increasing irrigation facilities to the region. But these are halfhearted measures to deal with the farmers’ problem. It is not the first time that debt relief have been used as a cure for farmers distress but the increase in credit facility has not succeeded in preventing farmers suicides. The PM has announced a debt relief for farmers in the 6 affected districts by waiving off entire overdue interest i.e. around Rs.712 crores as on 30th June 2006, so that farmers can be made eligible for fresh loans from the banking system. In addition to waiving overdue interest, Rs.1296 crores of overdue loans as on 30th June 2006 will be rescheduled over a period of 3-5 years with a one-year moratorium as well as ensuring an additional credit flow of Rs.1275 crores in 2006-07 in the 6 districts. In response PM package for Vidharba, Mr. Vijay Jawandhi, a farmer leader from Wardha said, “we demanded from the PM when he visited Waifed to waive all loans upto 25000 rupees of every farmer but he ignored our demand.” It is important to note here that majority of farmers in the suicide zones of Maharashtra, Tamil Nadu, Andhra Pradesh, Karnataka, Punjab, Haryana, Kerala are mainly indebted to the local moneylenders and not to the banking institutions. This is true for Vidarbha as well. Majority of farmers in Vidarbha don't have access to institutional credit and therefore they get into the trap of local moneylenders and big landlords. There are more than a lakh registered and an equal number of illegal moneylenders in Maharashtra, many of who operate in Vidarbha. They lend money at about 36% to 50% interest rate. Under the current distress situation, the farmers cannot return their loans and hence moneylenders seize their crops, their tractors, and their lands. The farmers can stand some level of indebtedness but they cannot withstand the public humiliation and social stigma heaped on them by these private moneylenders. But the government has done absolutely nothing against these private creditors who are illegally grabbing farmers lands throwing them out of their house and as a result farmers commit suicide. Suicide of one farmer means suicide of his entire family. Once the farmer commits suicide the debt burden is transferred to his children. Entire generations of youth are being subjected to the duty of looking after huge families and re-paying huge loans. The PM should have taken some steps to deal with this situation. The farmers get loans from Cooperative and Public sector banks at a compound rate of 12% to 14%. The current PM package does not provide any relief to farmers by decreasing this huge interest being charged from them. The interest rate on loan for farmers is much more than what is being charged for a housing loan or car loan in cities. Even though rural financial institutions like NABARD get money from Reserve Bank of India at a minimum rate of interest but by the time the same money reaches farmers passing through a four-tired system of NABARD, State Co-operative Bank, District Co-operative Bank, and Agriculture Credit Society, the interest rate on that money is increased to 12% to 14%. This needs to be changed so that farmers do not have to pay a high interest rate on their borrowing. No steps were taken to check the increasing cost of production of the chemical intensive, cash crop driven agricultural practices. Rather, through the PM package the disease itself has been offered as a cure. The reasons for increasing cost of production in agriculture is mainly because of replacement of open pollinated farmers seeds with company’s hybrid and genetically engineered seeds which require intensive chemical input, irrigation and most importantly, are not reliable and prone to failures. Several studies and reports of several VIP visits to the Vidarbha suicide zones indicate that there are large-scale failures of hybrid seeds especially cotton seeds including Bt. cotton seeds. Yet the PM announced a special package for seed replacement as part of the Quality Seed Replacement Programme with a grant of Rs. 180 crores. Under this seed replacement programme, the government will provide a 50% subsidy and the entitlement for quality seed is being increased from half acre per farmer to one hectare per farmer in the identified six districts. The diversification and seed replacement programme of the government will make the farmers vulnerable to high cost non-sustainable agricultural practices and increase their dependency on external high cost inputs including hybrid seeds, chemical fertilizers, pesticides and extensive irrigation. The 180 crore package for Vidarbha is not relief for farmers but an incentive to the seed industry especially the Jalana based Mahyco and its US partner Monsanto. Interestingly the PM did not speak about the large-scale failure of Bt. cotton developed and marketed by Monsanto-Mahyco, which is a key reason for increasing farmers’ suicides due to its large-scale failure in the area. Instead of being tried for failure of their seeds, the government announced this seed replacement package, which may be used to subsidize Monsanto’s Bt. cottonseeds for farmers in the 2006-07 cropping year. Therefore the proposed relief package would not only make the farmers dependable on highly expensive external inputs and a burden on scarce irrigation resources of the region. The likely results of this are not hard to fathom. Among the long-term relief, the PM announced an allocation of Rs. 2177 crores from the Central Government for completion of 524 major, medium and minor irrigation projects in the 6 districts over the next 3 years. With this 1.59 lakh hectare of land in the six districts will be brought under assured irrigation. In addition 240 crores will be provided for watershed development, check dam construction and rainwater harvesting in the 6 districts. This includes, on an average 500 check dams every year at an average cost of Rs 2 lakh per check dam will be constructed in six districts over the next three years, at the cost of Rs 60 crores per year. Besides that 15,000 hectare per district will be treated under watershed development programme for which grant support of Rs 60 lakh per water shed of 1000 hectares area each, entailing an outlay of Rs 54 crores. Rainwater harvesting schemes aiming at accelerated growth of irrigation potential for ensuring agricultural development of SC/ST beneficiaries including small and marginal farmers will be provided 50% back ended capital subsidy along with 50% bank loan, covering 1000 beneficiaries a year in each of the identified district. But do these irrigation schemes provide any relief to farmers in distress? Does this package provide any relief in a state where 70% area is still non-irrigated? There are already several irrigation schemes that are incomplete after a decade and in a cost overrun situation. There have been several small projects lying paralyzed for want of allocation of funds on time, not to say anything of government’s apathy. The proposed scheme announced by PM would bring in not even 2% of the dry land under irrigation. The PM announced an intensification of the micro irrigation scheme to cover all six districts which would cover approx. 17800 hectare under drip and sprinkler irrigation involving an investment of Rs 26 crores per year. In all, 53400 hectares in all six districts will be brought under sprinkler and drip irrigation. But even this subsidy is not directly given to the farmer but it will go the industry supplying the equipments for the drip irrigation. However two very important issues, directly linked to farmers’ suicides, was not mentioned by the PM. These are the Maharashtra State Cotton Monopoly Procurement Scheme and the need to increase the import tariff on cotton. In this trip to Vidarbha, Manmohan Singh succeeded in providing maximum incentives to industry through the seed replacement and irrigation schemes. He deliberately sidestepped issues that went against the liberalisation agenda of his government, i.e. increasing farm price for cotton and increasing tariff on imports. Even the National Commission on Farmers had recommended to immediately reinstate the cotton monopoly procurement scheme and recommended to provide Rs. 550/quintall advance bonus to cotton growers taking into account huge trade distorting subsidies to American cotton producers. Mr. Jawandhi from Wardha requested the Prime Minister and the CM of Maharashtra when they visited Waifed but neither the PM nor the Maharashtra government took any cognisance of this recommendation because the procurement scheme directly benefits the farmers while subsidy on seeds will benefit industry. The PM did not commit anything to increase the import duty on cotton that is presently as low as 10%, despite farmer’s longtime demand for restricting import of cotton. The United States provides approx. 4 billion US dollars (approx. Rs. 18,000 crore) as subsidies to its 25000 cotton growers. This has led to sharp decline in international price for cotton, which came down from 1.10 US$ per pound in 1994 to US 40 cents per pound in 1997. Since then our imports have increased and India has imported 110 lakh cotton bales, a record import from 1997 to 2004. Despite the recent WTO Dispute Settlement Body against it, the US has not brought down subsidies. This has resulted in sharp increase in cheap cotton imports in India and lowering of domestic cotton price as well as in restricting exports. Therefore the farmers are demanding for increase in import tariff from 10% to 60%. The PM acting on these fronts could have brought some respite for farmers. His evasion of these key issues underlines his government’s commitment to the flawed liberalisation and free market economic agenda. Farmers continue to demand that the Government of India must take immediate action to increase the import tariff on cotton besides reinstating quantitative restriction, which would provide relief to all the Indian farmers from cheap subsidised imports. They maintain that the Government of Maharashtra must immediately reintroduce cotton monopoly procurement scheme and increase the procurement price for cotton, which can provide some relief to the distress farmers of the state and can also help prevent the farmers’ suicide in the state. It is evident that the much-vaunted PM package does not address the root causes behind the agriculture crisis in the suicide zone of Vidarbha in Maharashtra. The financial support provided by the PM can bring temporary relief but for long-term solutions, the Central government and the state government need to strengthen all the necessary conditions for successful farming; writing off all loans, prohibiting private moneylenders, lowering costs of production through encouraging sustainable and ecological farming practices, prohibiting Bt. cotton and encouraging open pollinated varieties, ensuring a just price to farmers for its produce, increasing import tariff on all agricultural products including cotton, and reinstating quantitative restrictions. Unless these measures will be taken farmer suicides will continue and there will be no solution to the agrarian distress. |
