Farmers in the state of Punjab are neck deep in debt. According to the National Sample Survey Office (NSSO)’s 70th round on Situational Assessment of Agricultural Households in India, Punjab is second after Kerala and Andhra Pradesh with an average amount of outstanding loan of 1,19,500 per household.
The total outstanding debt of farmers in Punjab is 52,438 crore and average farm household debt is 4.98 lakh for year 2012-13, claims a study by Punjab Agriculture University, Ludhiana. Punjab is associated with kick starting the Green Revolution in the country and makes sizeable contribution to food procurement for public distribution, but over the years the profitability of cultivators has been declining abysmally. Farmers in Punjab practice scientific farming with the help of state-of-the-art machinery and assured irrigation. This makes farming more investment-intensive for farmers here. Rising input costs and dwindling returns in agriculture has put the farmers in double jeopardy.
According to a study, nearly 48.6 per cent of farmers who have committed suicide in Punjab in recent years are below 35 years of age, while the percentage is as high as 57.5 per cent in case of agricultural labourers. 7,000 farmers in Punjab committed suicide during 2000-2010 due to agricultural distress.
The problems of Punjab’s farmers are diverse. Despite cultivating in rain-fed alluvial soil of the Indo-Gangetic belt, cultivators are inflicted with declining water table, diminishing soil-fertility, lack of institutional credit, high land lease for tenant farmers and inadequate extension services.
The assured returns on wheat and paddy have driven farmers to grow mainly these two crops since the Green Revolution of the late 1960s and it has undermined soil health. Thus, farmers have to invest more in fertilizers and pesticides to maintain productivity levels.
Paddy is a water guzzling crop. Farmers rely highly on underground water to irrigate their fields and pay through their nose for running diesel-run power backup for tube wells. Subsidy on power is provided to agriculture sector but power supply is erratic and frequent fluctuations make it less viable.
Despite an extensive marketing network of grain procurement, implementation of Agriculture Produce Market Committee (APMC) Act and assured returns on crop with the help of MSP regime, cultivators are at the receiving end.
Lack of awareness and education among farmers and intervention of commission agents in connivance with government officials erodes the profits of farmers. Commission agents fleece farmers by doing paperwork on their behalf and give farmers bad deals.
Satish Verma, an RBI Chair Professor at the Centre for Research in Rural and Industrial Development, has estimated that the proportion of rural households with outstanding debt is about 90 per cent in Punjab and debt outstanding due to institutional sources is 60 per cent and non-institutional sources is 40 per cent.
The nominal revisions in Minimum Support Price have not been able to accommodate shooting input costs. Growing number of suicides by young farmers because of failure to repay debt is a serious concern, says Satnam Singh Behru, a farmers’ leader from Punjab.
According to reports, since 2007, about 6,550 industrial units have gone sick and approximately 18,770 units have either shut down or migrated from Punjab. An estimated 75 lakh reserve army of unemployed persons, mostly agricultural labourers, is staring at the job market. A state that recorded about 7,000 farmer suicides during 2000-2010 is a bad example to emulate as Punjab has always set trends.
Komal Amit Gera is a financial journalist and an adjunct Professor at Panjab University, Chandigarh.