Nearly 70% of India’s 90 million agricultural households spend more than they earn on average each month, pushing them towards debt, which is now the primary reason in more than half of all suicides by farmers nationwide, according to an analysis.
The failing economics of such farms–agricultural households in the south are most indebted–are exacerbated by additional loans that families take to meet health issues, leaving them with diminished ability to invest in farming. Outstanding loans for health reasons doubled over a decade to 2012, and loans for farm business fell by about half over the same period.
Nearly 85% of all operational farm holdings in the country are smaller than two hectares in size.
These 62.6 million households spending more than they earn had land holdings of one hectare or less, according to the 2013 situation assessment survey of farm households by the National Sample Survey Office (NSSO), the latest available data. In contrast, 0.35 million (0.39%) households owning more than 10 hectares of land had an average monthly income of Rs 41,338 and consumption expenditure of Rs 14,447, thereby maintaining a monthly surplus of Rs 26,941.
Households in southern India are most indebted
Andhra Pradesh has the highest share of indebted agricultural households (93%), followed by Telangana (89%) and Tamil Nadu (82.1%). The nationwide figure is 52%.
Loan waivers are not a solution
Recently, Uttar Pradesh and Maharashtra wrote off loans worth Rs 36,359 crore and Rs 30,000 crore, respectively. India faces a cumulative loan waiver of Rs 3.1 lakh crore ($49.1 billion), or 2.6% of the country’s gross domestic product in 2016-17.
No more than a third of Indian small and marginal farmers have access to institutional credit, which suggests that loan waivers may not help them.
In his 2016 budget speech, Finance Minister Arun Jaitley had promised to double farmers’ income by 2022.
“We are grateful to our farmers for being the backbone of the country’s food security. We need to think beyond food security and give back to our farmers a sense of income security. Government will, therefore, reorient its interventions in the farm and non-farm sectors to double the income of the farmers by 2022,” he had said.
Clearly, India’s farm crisis calls for a multi-pronged solution that addresses each of these challenges, and loan waiver is only one part.