WHAT IS FAILING FARMERS
Near zero income for farmers threatens the national economy
Let’s pray to God that the revised forecast doesn’t come true,” said Harsh Vardhan, Union Minister for Science and Technology and Earth Sciences, as the India Meteorological Department on June 2, 2015 further downgraded monsoon rain forecast in the wake of strengthening El Niño conditions over the Pacific Ocean.
A failed monsoon this year could mean sixth consecutive crop failure in most parts of the country. Weak summer monsoons and untimely winter rains and hailstorms in the past three years have already pulled down the overall agricultural growth rate to near zero per cent. The pattern is uncomfortably similar to the most severe droughts in recent Indian history. Fears of foodgrain shortage and food price inflation loom over the country. But the worst affected will be the farmers. Decades of decline in agricultural productivity has left them cash-strapped, distressed and without resilience to cope with anymore adversities. The agricultural economy is primarily made of loans now. At this point, a collapse of the agricultural sector seems imminent. This will hit 60 per cent of the country’s population that relies on farming and affect the national economy that’s struggling to revive.
The consecutive crop failures, due to too much and too little rain, have already pulled down the agricultural growth rate to 0.2 per cent, from 3.7 per cent in 2013-14. Food prices have started to
creep up. The Economic Survey 2014 celebrated the fact that the rural wage growth had declined to 3.6 per cent in 2014 from 20 per cent in 2011. But it was oblivious of the fact that the decline indicated a major dip in income for 400 million daily wagers.
The 70th round of NSSO released in February shows that agricultural lending grew by 24 per cent during 2003-13. The agricultural GDP grew by just 13 per cent during the period. This is worrying as it indicates that while other growth factors like production and consumption remain stagnant or are declining, agricultural GDP is growing due to credit growth. If agricultural lending from all institutional sources like the public sector and cooperative banks is considered, farm credit is around 60 per cent of the agricultural GDP, according to Emkay’s assessment. In a way, it is a credit bubble waiting to burst.