Agrarian crisis and farmer’s suicide in punjab – need for corrective political action

Farmers’ suicide is a consequence of deep –rooted agrarian rural distress as well as of four important factors: technological, ecological, socio-cultural, and finally policy factors. Suicides by farmers were first highlighted by the media in the states of Maharashtra, Kerala, Karnataka and Andhra Pradesh. These were attributed to the poor economic status of the farmers there, in view of widespread poverty. But then came the reports of suicides by farmers in the grain bowl of India-Punjab-which was perturbing and quite unexpected in such a prosperous region. So long as suicide remained an occasional and stray incident, it did not generate much public concern. But when the incidence showed an upward trend and affected a large section of society, in the mid-eighties, it became a public issue, to be viewed, studied and analyzed in all its seriousness.


Punjab, a rather small state occupying less than 2 per cent of total geographical area and little more than 2 per cent of the total population of the country, has earned the title of “India’s bread basket.” The state was viewed as the most dynamic and progressive state of the country, particularly on account of its success in the agrarian sector during the green revolution. Of all the states of India, Punjab’s agricultural growth rate was the highest during the 1960s to the middle of the 1980s which was the first phase of the green revolution. However, the elation did not last for very long. After two decades of growth, the green revolution began to lose its magic, and was followed by the series of crisis. Beginning with the early 1980s, the word crisis became the dominant mode of representing Punjab. From politics and economics to culture and ecology, everything seemed to be in a state of crisis in Punjab. At present, the state of Punjab, earlier regarded as an agriculturally developed region of India, has been passing through a severe economic crisis.

The paradoxical situation of rising of cost of cultivation with stagnant productivity and minimum support price reduced returns from agricultural operation. The reduction of differentials between returns and cost of production, the increasing uncertainty of weather as well as a dependence on borrowed money at higher rates of interest from moneylenders were the reasons responsible for increasing the indebtedness among farmers of Punjab. It has compounded problems to the extent that farmers of Punjab resorted to committing suicides. If we ponder over the root causes of agrarian crisis and consequent farmers’ suicide in the State, we will find that on the one hand, commercialization of agriculture, which has become prominent, needs more money to invest and in the agriculture set up borrowing is a necessity. It is neither objectionable nor a sign of weakness. But on the other hand, the institutional lending is inadequate and costly and farmers, particularly small and marginal farmers, have to resort to private non-institutional sources of finance, which have their own ways to exploit and squeeze the farmers’ net income. The institutional credit mechanism fails to fulfill the demand for credit in the state in both quantity and quality. Consequently, farmers live in a vicious cycle of debt, pressure, guilt, and lies that drive them further into more debt. Therefore, failure of the institutional credit mechanism was the root cause of the crisis and its manifestation into the distress act of suicides by farmers in Punjab.

Over the past decade, the state has experienced deceleration of its economy and has slipped in the ranking of the prosperous states in the country. The crisis in agriculture has manifested itself in the form of stagnating productivity, rising cost of production, decelerating income, shrinking employment, escalating indebtedness and ecological imbalance. One of the main consequences of this agrarian distress has been that the marginal and small farmers, who find it increasingly hard to sustain on farming, are getting pushed out from agricultural sector. These farmers are not being fully absorbed outside this sector due to the unfavourable nature and structure of the industrial sector in the state. Thus, a large chunk of ‘reserve army of labour’ is prevalent in the economy. It is estimated that about 35 lakh persons are unemployed in Punjab, out of which about 24 lakh belong to rural areas. The fact remains that there is a decline in the proportion of cultivators in the total workforce of the state that has added to the unemployed or semi-employed force, and has put pressure on an already over-crowded agricultural labour market. The situation has worsened to the extent that young farmers have become the victims of suicides. The surviving families of farmers who commit suicide are predominantly female. Women often become the sole supporters of families. These women, who previously managed the domestic sphere and perhaps engaged in light fieldwork, now find themselves playing the new role of breadwinner and sustaining their families amidst extreme outstanding debt. While most rise in the face of adversity to sustain their families, many remain deeply depressed and in a state of desperation. The attitude of the State administration is also pushing the people to the extreme. Villagers fear seeking help from State officials since they are often accused of causing the suicide, which is a crime under the Indian Penal Code. Therefore, it is fair to argue that such State Government mismanagement at the least fails to prevent suicides.


Need for Corrective political action

This is the crucial angle on which hinges the future roadmap of agriculture. What is required is an agriculture model tailored to the needs of market and that should be the government’s answer to the crisis. There is clear polarisation of views on efficacy of the view that the market that take care of its own will take care of agriculture too or not. However, the government should be clear on which direction to go keeping in mind the requirement of all sections of the famers of the state. The then Congress Government in Punjab had launched a plan to introduce 1936 formula once advocated by the well known farmers’ leader Sir Chotu Ram. This formula envisages waiver of loans if farmers have paid as much interest as the principal amount. The formula, which became an act, is not applied any more. To develop farming sector and to increase the farming efficiency, it was recommended to enhance the accessibility of small and marginal farmers to formal agricultural credit. According to the results, it was also suggested that loan for the livestock should be enhanced. Thus, by providing more credit for the purpose of livestock would definitely enhance farmer’s income and ultimately would reduce poverty. The then Government of India advised the financial institutions to double the supply of agricultural credit in three years, from 2004 to 2007. In the subsequent annual budgets, Government of India had announced targets for credit to agriculture to ensure adequate credit flow to the sector. The flow of agriculture credit since 2003-04 has consistently exceeded the target. To mitigate the distress of farming community, in general, and small and marginal farmers, in particular, and to declog the institutional credit channels and make farmers eligible for fresh credit, the Debt Waiver and Debt Relief Scheme, 2008 was announced in the Union Budget for 2008-09. The then Government had implemented a package for revival of Short-term Rural Cooperative Credit Structure in the country. The Revival Package aimed at reviving/strengthening the Short-term Rural Cooperative Credit Structure (CCS) and to make it a well-managed and vibrant medium to serve the credit needs of rural India, especially the small and marginal farmers.

The 11th plan period was a period of action. During the period, policy focus was on increasing the flow of agricultural credit. Firstly, target was given to the banking sector to double the flow of credit to agriculture in a matter of three years, and later came the announcement of agricultural debt waiver [and one time settlement scheme for large farmers]. This period saw an increase in the flow of credit to agriculture from 2,54,657 Crore (2007-08) to 4,46 ,779 crores (2010-11). The period was an interesting one not only because of the thrust in the flow of agricultural credit and increased policy attention towards the growth of credit, but also from the perspective of institutional reform. There are also committees and commissions that the central government had appointed to analyse the reasons for farmers’ committing suicide.

It has now become an imperative that first the demand for agricultural credit in each state/region be assessed depending on crop patterns and current inputs and capital requirements in relation to targeted output growth rate and then, policy framework should be put in place to meet those requirements, instead of increasing the credit supply uniformly in all the states/regions of the country. Such a policy sometimes proves counterproductive and that appears to have happened in the Punjab agriculture.


There are many kinds of unconventional risks emerging in the agrarian economy of Punjab, which if not estimated and addressed properly may pose a severe challenge to its sustainability and hence food productivity as well as the farm incomes. This risk may further endanger the food security position of the nation and may increase the vulnerability of the poor in the country. The decline in ground water has resulted into an increased consumption of power by the agricultural sector. The cost of cultivation has increased. Therefore, water harvesting management and construction of water embankments need serious attention of the Government. The ambiguous path of development has not created debt free farmers. On the contrary debts of farmers have been multiplying. Institutionalized credit system had failed to address the issues of rural indebtedness. This is the reason why moneylenders have transformed themselves into a form of sharecroppers or absentee owners. Many a time the agreement that the farmers entered into with the money lending class is either in the oral form or in the written form, which has no legal sanctity. This has aggravated the problem, particularly the families of deceased- the state would not recognize the loan taken from the moneylenders except the institutions. Lack of access to credit is a severe constraint for many farmers in Punjab. The shortage of credit availability or capital constraint faced by the farmers is one of the major problems in the adoption of modern technologies and efficiency improvement in the agriculture sector. There are several irritating and bureaucratic hassles in obtaining an institutional credit. Studies have found that a farmer on an average has to incur Rs.4016 for obtaining a loan from a commercial bank, which amounts to about 5 per cent of his total loan. In the case of cooperatives, the transaction costs have been worked out to be much lower, around 1.2 per cent of the loan and cooperatives are located right in the villages. In spite of significant increase in institutional lendings, the mal-practices prevailing in the system make this lending more cumbersome and costly. Therefore, it is high time to address these inadequacies of the institutional sources. Considering the distinctive characteristics of agricultural credit, especially in developing nations, it should be reasonable for the government to support rural and farming sector development. The farming sector development could be achieved by scheduling an adequate policy framework for more efficient performance of rural financial market.

To conclude, the Punjab state is a major agricultural state which is important from national food security point of view as well. However, there has been a recent slowdown in agricultural growth and large scale degradation of soil and water degradation has been witnessed. It is significant to note that even though farmers are migrating from agriculture, about one-third of the marginal and small farmers were dissatisfied with their new occupations and wanted to shift to another profession. In such a situation, it is of utmost importance to address the problem of the small farmers who are leaving farming. There is a need to look into the viability of the farming sector, particularly of small farmers. The gradual withdrawal of the state from active participation in development activities has resulted in sharp decline in public investment in agricultural infrastructure and research.

Clearly, suicide is not an individual act. It is a reflection of the total failure of state policies and economic mechanisms that are being dictated by the dynamics of global capital. Farmers’ suicides in Punjab and across the country in other states are the tip of the iceberg indicating the plight of millions of the rural poor. It is the breakdown of a system that is affecting a multitude of people in different ways. Those who own little land as well as the large section of the landless that is dependent on wage labour in the agricultural economy have much at stake both in the struggle for a life of dignity as well as a future for their children.

The problem of suicides in farming community needs, therefore, to be tackled in a holistic way. Awareness among farmers will have to be created to avoid unproductive expenditure as well as efficient use of investments in irrigation structures through adopting efficient water use measures. Crop insurance programme need to be strengthened, especially in cash crops like cotton, where the yield and price variability are relatively high. Innovative loan settlement mechanisms need to be developed in the case of crop failure so that the farmers can cope with falling incomes and tide over financial crises. Regulation of non-institutional lenders is necessary to prevent them from charging exploitative rates of interest from farmers and pushing them into a debt trap. Government and social institutions should be made proactive in addressing the economic distress of farmers during the economic squeeze arising out of climate change or market failure. Education is very important for human resource capacity-building in economic activities as well as for coping with social problems. The government should, therefore, strengthen the educational network in these areas to improve literacy levels of rural people in order to equip them for better livelihoods and to cope with economic distress.

Suicides among farmers are avoidable. This would require preventive and remedial measures to avoid agrarian stress on one hand and relief plus rehabilitation of victim families on the other. There is need to pass a law for debt redemption among farmers. At the same time, identified victim families need to be provided with compensation and rehabilitation package. In fact, the poor farmers need to be given a comprehensive social security as suggested by the National Commission for Enterprises in Unorganized Sector (NCEUS) 2007. Within agriculture sector, efforts should be made for group cultivation (may be cooperative farming) for small and marginal farmers along with taking up of marketing and processing activities by these cooperatives. Rural education and health has to be put on the rails. The children from rural areas must be given quality education and make them to access skills at affordable costs enabling to take up jobs in modern sectors outside the agriculture so that pressure on agriculture can be reduced. The country needs proper education and employment policy in a coordinated manner.

Majority of the farmers in Punjab are small farmers and, therefore, the technology promoted in agriculture should be the one that is better able to safeguard the interests of these small farmers. Remedies, thus, have to be found not only in terms of short term or immediate solutions to suicides, but also long term solutions to end the agrarian crisis itself. While immediate measures could include relief, mainly financial relief, to the families of suicide victims, and attempts at their rehabilitation, the long term measures to ‘nip the evil in the bud’ should comprise of attempts at rural industrialization. This could be done on the lines of how and what has been undertaken in East Asian countries especially in Taiwan. Farmers’ cooperatives, sans middlemen, to produce, process and market output on the farm gates can be a way out. This would not only provide the agricultural sector with a much needed diversification from the wheat-paddy rotation, but also prove to be remunerative in terms of incomes and employment. Farmers’ organizations must engage themselves to start collectively processing and marketing enterprises rather than purely depending on agitations for more remunerative prices. Asking for rights along with engaging in industrial activities has a capacity to eliminate the middlemen who thrive on surpluses generated through processing and marketing activities. State government apart from supporting and extending cooperation must become innovative to articulate policies in the fast globalizing world to prod farmers’ organizations to initiate those activities which integrate the processing and marketing activities on the farm gates. This also underlines that the state and state-run financial institutions would have to alter their system of lending-loans and would have to be made adequate, timely, cheap and commensurate with demand. The red tape and additional costs involved, which makes institutional loans so unattractive, would also have to be cut drastically.

Agrarian distress and its manifestation in the form of suicides has to be dealt with in all seriousness, beginning from soothing broken-both mentally and financially-families to longer term remedies of correcting the crisis itself. There can be no short cuts, only patient, persistent efforts by learning, adapting, adopting and implementing.

* The Author is an Advocate and a National Spokesperson of the Indian National Congress.