 "Punjab may get Centre's support for agri dues")
Fifty-eight and counting... the number of farmer suicides in Punjab during the last three months due to agrarian distress is alarming and among the highest in the country. Even as Union minister of state for Agriculture, Mohanbhai Kundariya, was divulging details on farmers suicides in India and said that Maharashtra topped with 57 suicides during the past three months, followed by 56 in Punjab, a farmer and his mother in village Jodhpur of district Barnala consumed pesticide in the presence of the police and revenue officials in broad daylight.
Maharashtra, Punjab and Telangana top the list for farmer suicides in India, informed the Minister in Parliament. Rain-fed states may be in grip of an agrarian crisis due to drought in the last two years, but Punjab is an irrigated state that pioneered the green revolution in India. Nonetheless, it is grappling with high debts and dwindling farm income.
Despite assured purchase of crops in Punjab (wheat, paddy and cotton), the farmers are neck deep into debt. According to a study conducted by RBI Chair Professor at the Centre for Research in Rural and Industrial Development (CRRID), Satish Verma, the debt-to-income ratio in Punjab is 96.77 per cent for the period ending December 2013.
The debt-to-income ratio is the highest among low-income farming families and keeps decreasing with increase in income. A joint study conducted by PAU Ludhiana, GNDU Amritsar and Punjabi University Patiala has calculated the estimated farm debt of Punjab at Rs 69,000 crore. Of this, RS 54,000 crore is attributed to the institutional sector. The study also incorporates data on farmers suicide from year 2000-2010 in the state and reports 3,954 farmers deaths in the given period.This study has been approved by the state government. A survey is going on in the Universities of Punjab on period post 2010 and this is yet to be compiled.
While the minimum support price of the grains has been revised by 4-5 per cent year-on-year, the cost of cultivation has been rising by 8-10 per cent y-o-y (labour cost, diesel, pesticides, deepening of tube well bore) so the gap has been widening in the past few years that has accelerated the incidents of suicides in Punjab, told G S Kalkat, Chairman, Punjab Farmers' Commission.
| Rural indebtedness and debt-income ratio in Punjab as on December 2013 | ||||
| Household income* | No. of households | Annual income per household* | Debt outstanding per household* | Debt outstanding per household as %age of income |
| Up to 0.50 | 8 | 0.22 | 0.86 | 390.91 |
| 0.50-1.00 | 28 | 0.66 | 1.29 | 195.45 |
| 1.00-2.50 | 44 | 1.67 | 2.47 | 147.90 |
| 2.50-5.00 | 38 | 3.49 | 5.36 | 153.58 |
| 5.00-7.50 | 19 | 5.86 | 6.49 | 110.75 |
| 7.50-10.00 | 15 | 8.26 | 6.50 | 78.69 |
| 10.00-20.00 | 23 | 13.62 | 10.61 | 77.90 |
| 20.00 and above | 4 | 28.13 | 9.45 | 33.59 |
| Total | 179 | 4.95 | 4.79 | 96.77 |
| * Rs lakh; Source-Study conducted at CRRID Chandigarh | ||||
According to National Sample Survey Data released in December 2014, the average debt per household in India is Rs 47,000 per annum and on all India basis more than 60 per cent of rural households are under debt. A survey conducted by ICSSR (Indian Council of Social Sciences Research) released in January 2016 pegged the average debt per household in Punjab at an average 5,52,064. The state average of household under debt as per the survey is 85.9 per cent.
The data on rural indebtedness and farm distress are sourced from different surveys because no comparable data from same source are available.
A disturbing trend in Punjab agriculture is indicated in Punjab census 2011 which pints that number of small farmers (having a land holding of up to 5 acre) dipped from 5 lakh in 1991 to 3.60 lakh in 2011 census. The high cost of cultivation in Punjab due to mechanization and low water table has turned small land holding unviable for cropping.
An average income of Rs 3000 per acre (after meeting all expenses) gets an income of Rs 15000 per crop for a small farmers. This amount is not sufficient to meet his daily needs and he borrows from one source to repay the other and gets into a debt trap, reveal the studies.
The high cost of cultivation due to increasing cost of inputs and declining water table incur higher burden y-o-y on farmers undermining the profitability in agriculture in Punjab, says Sukhpal Singh, a Professor at Punjab Agriculture University, Ludhiana.
The farmers avail interest subvention from the nationalized bank but need to repay the principal and interest at the end of the year to be eligible for the loan next year. He borrows at a higher rate (24%-36% from commission agents) to repay the bank to maintain the good credit record. One year income is needed to pay off debt in rural areas but at low income levels it is almost four times of the income, and such households comprise two-third of rural households, examines Verma's study.
Despite liberal lending by the nationalized banks, the grip of commission agents in Punjab has become stronger over the period of time.
Farmers in Punjab cannot sell in open market as they are entitled for various schemes (like health insurance scheme for farmers) of state if they produce ‘J Form’ which is a receipt of sale of grain to the commission agent. The law of the land allows them to do so but the tacit network of moneylenders and procurement agencies makes it impossible for him to sell in open market.
In order to regulate unorganized farmer credit and debt market, Punjab Assembly recently passed ‘The Punjab Settlement of Agriculture Indebtedness Bill, 2016’ to provide relief to the agriculturists by creating a mechanism for fair settlement of their debt related disputes. In the absence of a ceiling on the rate of interest charged by the money lender from farmers, tenet farmers and farm labourers, the bill remains a paperwork. The maximum rate of interest, says the bill, would be fixed each year by the government based on repo rate by the Reserve Bank of India and interest charged by the banks.
The private banks, in order to achieve target, lent aggressively against the collector rate of land to the farmers. The loan amount was spent on consumption. The farmers in Punjab borrow from unorganized private moneylenders to repay bank loan. In years to come, the situation will become more precarious when the amount raised to repay the private banks debt would grow beyond farmers’ means, said a banker who did not wish to be quoted.
Efforts by the state government to diversify agriculture did not fructify as market for crops other than wheat-paddy-cotton are not available to Punjab farmers.
