Indian agriculture in the age of liberalization

Several discussions are going on centering around Indian agriculture and its on-going crisis. Near about 180 farmer organizations across the country are marching and demonstrating on different demands of the peasants. Activists are debating to find out the primary demand which will resolve the basic problems faced by the farmers. Meanwhile, Jignesh Mewani, an important face of recent Dalit struggles, is trying to organize a Dalit movement relating the question of land as one of its central driving force. Putting this land question in the forefront landless peasants mostly belonging to Dalit communities have developed glorious struggles in Sangrur and other districts in Punjab.

Various left organizations and intellectuals are now analyzing the changes that took place in Indian agriculture over the last three decades. However, while trying to end the enormous distress of the Indian farmers, they are replacing the land question and are placing the pre-capitalist exploitation in Indian agriculture as the primary question. They are trying to find a solution “somewhere else”. In such a condition what will be the character of Indian agriculture and what will be the line of peasant movement?

In this present article, we will briefly try to understand this problem. If we look at the agricultural economy of India in the last two decades, we will observe that more than 3 lakh farmers committed suicide since 1998. The percentage contribution of agriculture to Indian GDP was reduced to 17.42% (2014-15) in this period. On the other hand, the percentage of Indian labour force associated with agriculture (2011-12) is 48.9%. As the contribution of agriculture to Indian GDP is following a decreasing trend, a large number of economists have started saying that creating job opportunities outside the agriculture sector should be considered as the remedy for this agrarian crisis and farmers’ suicide. Unfortunately, these intellectuals have failed to realize that GDP acts only as an index to measure role of different sectors in the current system. There is no relation between GDP and the social importance or necessity of these sectors. It is not possible to assess the socio-political importance of the people associated with Indian agriculture with the help of GDP.

Nearly, half of the total labour force in India is associated with this agricultural sector and the per capita average income of this labour force is one-sixth of the income of the labour force associated with other sectors (Economic Survey). This is the reason why governments are forced to introduce various schemes in this agriculture sector. State-investment in agriculture has become twice in 2007-08, when compared to the scenario of 2003-04. However, after analyzing the data of the agricultural loans during this period, it is observed that 1/4th of such indirect loans (for agricultural equipments and agricultural businesses) are not at all meant for the farmers. Moreover, the direct loan, which was 4/5th of the total in the year 2000, was reduced to less than 1/2 in 2011. Corporate agricultural traders captured the rest of the loan. The Indian ruling class waived loans for the big capitalists to save its back from the worldwide economic crisis of 2004. At the same time, they also waived agricultural loans to extract electoral benefits out of this and introduced schemes like MNREGA across the country. This initiative put some positive impact in agriculture, giving rise in the demand of agricultural goods. But, as a worldwide scenario, the price of agricultural products started to reduce again from 2012-13. As Indian agriculture was already associating itself with the global market through various means, the subsequent impact was also visible in Indian agricultural products. As a result of this, the investment in agriculture and other related sectors was reduced in proportion to the income from these areas. In 2011-12 it was 18.32, and in 2014-15 it was reduced to 15.82.

The farmers faced severe distress due to the increasing production cost and decreasing price in agricultural products. Wages in rural area were reduced drastically due to less work opportunities in agriculture, slowdown in construction works, and the sheer apathy of the government towards MNREGA. As per the actual calculation, it reached to a negative value at the end of 2014. In the last few years, the price of agricultural products remained stagnant or followed a decreasing trend due to economic recessions in national and international economies. That is why the income of the farmers is reducing. Approximately, 1/3rd of the income of a farmer’s family is constituted by the wage labour. Therefore, the wage reductions in construction, manufacturing, and agriculture have a large impact on farmers’ families.

In a situation like this, the scheme of mitigating the tax deficit was introduced in 2015 and was also expanded in 2016-17, which resulted into a decrease in national demand. Due to this scheme, in 2016, just before the demonetisation, onion, moog, soybean, nut, cotton were sold at a price that is 3-5% lesser than the minimum support price recommended by the government. In the first week of October few news articles regarding this were published in various newspapers such as Hindu, Business Standard etc. Then, the demonetisation broke out and gave a severe blow to agriculture by pulling out 86% of total money out of the market. Due to the staggering condition of agricultural crops, including kharif crops (autumnal harvests) and poultry, the market demand reached the nadir. The income in agriculture was reduced further due to the policy of demonetisation, the decision of mitigating the tax deficit of 2017-18, the unwillingness of the Reserve Bank in reducing the rate of interest (in a fear of losing foreign capital), and the continuation of the recession which was going on since the last 5-6 years.

Apparently, it is nice to hear about the reduction of price of the agricultural product. However, if it occurs through the decline in overall demand, then it reduces the income of the working class. In turn, it results in unemployment. The farmers get lesser price for agricultural products, the workers get lesser wages, and on the other hand the capitalists extract increased rate of profit out of this devastating situation. The growth in agriculture was upwards in 2004-12. At the same time, it was observed from the result of 70th round (2012-12) of National Sample Survey (NSS) that in case of 70% farmer families the income from the all sources was lesser than their expenses. If we evaluate the same by considering the income from agricultural sources only, then the income of 87% farmer families were lower than their expenses. The average income of the land owners, who possessed 4-10 hectares of land, was Rs. 19,637, and it was Rs. 41,388 for the land owners, who possessed more than 10 hectares of land. Out of 18 states, the dependency of the farmers on loans has increased in 12 states. With respect to the annual income, the average loan amount of a farmer’s family has increased from 49.6% in 2002-03 to 61% in 2012-13. It is not true that the dependency on loan always leads to poverty. The owners of large agricultural farms may gain more profit by taking more loans. However, in case of poor farmer families where it consists of more than 70% of the total, the scenario is different. Their deteriorating condition testifies the presence of a pernicious usury system. In case of banking institutions the percentage of long term loans, which was 70% in 1991-92, was reduced to 40% in 2011-12. This infers the increasing stronghold of non-institutional loans and the loans taken from money lenders. After the nationalization of the banks in 1971 till the beginning of the liberalization era in 1991, the proportion of non-institutional loans in Indian agriculture was low. However, the scenario started to change from the nineties. When the reports of such loans were published, then several economists started discussion by marking it as “the return of the money lenders”. Even, the then Prime Minister Manmohan Singh proposed to provide legal recognition to such money lenders. According to an information of 2012-13, it was visible that lesser the area of a land, higher the dependency of this usury system. According to an NSS data, the total amount of loans of 9 crore farmer families was Rs. 4,23,000 crore, among which 1,23,000 crore (29.5%) was taken from money lenders, businessmen, landlords and shop-owners. According to information of 2012-13, the payable interest on the agricultural loan was higher than the net investment on the tools of production. The stronghold of the businessmen and the lack of government’s involvement have made the situation more difficult for the farmers.

According to a report of NSS (2012-13) among 20 primary crops, barring sugarcane (50-57%), the government or cooperatives did not collect more than 20% of produced kharif crops (rice), wheat, barley, cotton etc. Regional businessmen, traders of agricultural tools bought most of the stuffs at a low rate. The large difference between the wholesale price of agricultural products and the price that the farmers had got is clearly visible in a report of economic survey in 2015-16. This difference is more in case of potato, onion, and nuts, which are easily perishable. The small farmers are forced to buy agricultural tools at a higher price. The economic survey of 2015-16 exposed that 51% of farmers were forced to buy urea at a higher rate than the maximum retail price. In Punjab, Tamilnadu, Uttar Pradesh the small marginal farmers used to buy agricultural tools by paying 61% more than the rich farmers. If we consider the nation-wide average it is around17%. From the survey of 2002-03, we also come to know that the states that had more tendency of selling crops in market were also bearing more agricultural loans, and astonishingly the incident of farmer suicides were also more in these states.

Now let us analyze the position of the political and economic analysts who are emphasizing on increasing the work opportunities in other sectors compared to agriculture in this period of agrarian crisis. If we analyze the situation of different livelihood opportunities in India in 2009-10, then we will find that 52% of the total work force was associated with agriculture, 9% with construction works, 12% with retail business and restaurants, and 9% with unregistered manufacturing industries. The amount of per capita value-contribution of the agricultural work force was only 29% of the average per capita value-contribution of the total work force. On the other hand, the very small work force associated with finance insurance and real estate contributed 25 times of the average contribution per capita. Near about 85% of the total work force was associated with unorganized sector of manufacturing industries and they earned only 22% of the total income. On contrary, the small 15% work force of organized manufacturing industry earned the remaining 78%. It is also evident from the available data that the labours from unorganized sector added 1/3rd of the total price per head.

In reality, the unorganized sector is the last resort of the workers who have been uprooted from the agricultural fields. Meanwhile, if we look into the economic surveys of the central government in 2012-13 and 2015-16, we will find the attempts of destroying small industries& unorganized sectors. Government support in small industries, labour laws, legal restrictions were claimed to be barriers against such attempts. The survey suggested transferring agriculture into the hands of the corporates by first acquiring the lands and then leasing out the lands to the corporates. It was touted that such attempts will result into a healthier agriculture, where the work opportunity will be increased. But how much opportunity is there for the work force that has been evicted from agriculture? In 1980, with respect to per unit capital, 4.5 times of the number of workers got works in comparison with the year 2000. But in the present time recruitment of the workers is reduced drastically, both in capital intensive industries and labour intensive industries. As a result of this, the workers, who are evicted from agricultural lands, are getting employed in less productive and less income generating unorganized sectors. The rural families are trying to survive by drawing earnings from various low-income non-agricultural sources and by putting family labour in agriculture. In this regard, an interesting reading is noted from available statistics. In 2016, Thomas and Joyce showed in an article that while census was showing the increase in labour force in agriculture, NSS portrayed just its opposite. The reason behind this was NSS considered the same agricultural worker as a construction worker. In the first two decades of liberalization (1991-2011) total 16 crore 70 lakhs employments were created, out of which 9 crore 10 lakhs employments were marginal (workers got to work for only six months in a whole year) in nature. Only 52% of the capable work force in India get chance to work. The percentage is 71% in China and 65.5% in Brazil. According to a statistics of 2010-2011, in the village areas in unorganized non-agricultural sectors a total of 5 crores 30 lakhs people worked and yearly generated a value of Rs. 37,000 per head, which was lower than the agricultural sector (In case of agricultural sector it was Rs. 54-57,000 in 2010-11). Therefore, from this piece of information it is evident that the unemployed force generated by the agrarian crisis will return back to their agricultural roots if enough opportunities are provided there. In such a circumstance, according to the NSS survey in 2011-12 a person from rural India could afford to spend Rs. 80 for his/her cloths, beddings etc. Although it was the average amount, in reality, 2/3rd of the village people spend less than this. According to the economic survey of 2016-17, in a manufacturing initiative of cloths, 24 employments per lakh rupees are generated in which 8 women are associated, 7 employments are generated in leather products and shoes factories, 4 employments are generated in garment industries, and 0.3 employments is generated in car manufacturing factories. This survey also tells us about export-based employment, where if more than 1 crore is exported in cloth manufacturing industries then 8 employments will be generated, and 7 employments will be generated in leather and shoe manufacturing industries. In spite of the low rate of buying power in 2011-12, the national market of cloths and decorative products touched Rs. 1,36,000 crores. In case of leather and shoe industries the amount was Rs. 29,500 crores.

It is evident from these statistics that a radical reform in agriculture will definitely increase purchasing capacity of rural population, extend rural industries, rural employment, and rural market. As the agricultural GDP is only 17%, the capital owners are not much interested in such reforms. However, if we think from the perspective of the working class and people as a whole then definitely investments in agriculture and people centric reforms will lead towards huge employment, as 52% workers are involved in this agricultural sector. State investment in agriculture is following a consistent decline in the last two and half decades. In 1980 it was 42% of the total expenditure on agriculture, and presently it has become 15% of the same. In 2011-12 the government’s expenditure in agriculture became 0.4% of the total GDP (on-going expenditure and the wages of the workers will be added with this figure). Even mainstream economists believe that government’s investment on agriculture will by default bring investments from private organizations. Such investment from the government side also leads towards various developments such as different types of irrigations, rural electrification, extension of agricultural fields, supply of seeds, services for cattle, rural banks etc. These types of infrastructural developments increase the capital investment and accentuate the production growth in agriculture. Such initiatives are more useful in mitigating the rural poverty as compared to other policies. However, in reality, government’s illusive strategies are constantly pushing the farmers and the whole agricultural sector towards a severe crisis.

In this context, another opinion is growing among the present economists, the political parties, even among the radical and revolutionary leftist parties. According to them, in last three decades of liberalization, the inequalities in land owning, land tenancy, usury system, and the loots of the traders are not like the past. According to them, pre-capitalist and semi-feudal characteristics are not much prominent in present day rural India. Therefore they are trying to find out a solution in different way.

Let us start arguing with a statement of Working Group on Land Relations (WGLR) of Planning Commission (2006): “When liberalization slowly started entering into Indian economy in the mid-eighties, and then since 1991 with a power of thunderstorm, the question of land reform became obsolete in Indian political arena. It became an issue that everyone had forgotten by then”.

In this time period, what was the status of land in terms of rural wealth? Joyraj and Subhramaniam showed in an article written in 2006: “Land is still considered as a wealth and a symbol of power in rural India. Till now, the land holding constitute 73% of the wealth of the top 14% richest people in rural India, whereas, 15% of their wealth is in the form of housing property. The proportion of machineries and other tools is very less.” How can those shouting for the capitalist development in Indian agriculture explain this fact? In 2013, according to the 70th round of NSS this proportion of land has further increased, although, in that case the measurement techniques were different.

The inequalities are not reduced in case of land distribution. According to the information regarding land and livelihood, of land and lively resource holding, those holding 2% of ownership are owners of 25% agricultural land, and those holding 7% of ownership are owners of 47% of agricultural lands. Small and marginal farmer families consisting of 87% of the total farmer families, own less than 2 hectares of land. The proportions of money lenders, traders, and landlords were increased by 6% in 2012-13, in comparison to the same in 1991. On the other hand, loan intakes of rural poor families increased 4% at the same time (according to the data of 48th and 70th round of NSS). Meanwhile, the average volume of agricultural holding was reduced to 1.15 hectare (2010-11). In an article published in EPW in 2008, Vikash Rawal showed that if we take the ceiling of 8 hectares per holding then the area of land available for distribution will be 3 times of the area of the land which has been distributed so far. We should rememberthat we are only considering the lands that have exceeded the government defined ceiling. We are not considering the principle of “Land to the tillers” here. In the data of net amount of tilled land we often notice differences between information received from NSS and other official surveys. From a paper written by Deepak Kumar (2013), we come to know the difference between NSS data and the data of agricultural census (2010-2011) was 38%, and the NSS information was less by 46% than the information collected regarding the utilization of agricultural lands (2013). Despite this, according to the information of NSS, in this period the land holding of the bottom 50% of farmer families was reduced from 4.1% to 0.4%, and it was increased by 1.6% in case of the topmost 10% families. The percentage of landless farmer families that only had homestead land has crossed 50%. It was 56% according to the Socio economic caste based census of 2011. It is noticed that the number of self-employed workers (domestic) has reduced by a small margin. Due to the unavailability of any alternatives, the poor farmers are forced to involve themselves with cultivation in spite of their low income from agricultural labor.

In 1976, the national commission regarding agriculture announced that land reforms were initiated in order to break the existing relation between tenant and landowners. But after 30 years, in 2006, Working Group on Land Reforms (WGLR) of the planning commission said that although ensuring the land ownership of the tenants or the sharecroppers is the policy, but it is not possible to achieve in near future. In addition to this, the specialist committee of NITI Aayog is now saying that the system of lease holding of land is not equivalent to feudalism, rather it has become an economic necessity, and the poor mass have become politically stronger due to the presence of democratic institutions.

On the other hand, the WGLR committee of planning commission remarked that NSS is showing the land tenancy in a way which is 7-8% less than the real scenario. The amount of this hidden land tenancy is 15-35%, which is hidden in many researches. Many of these are hidden and verbal deals. According to the Koneru Ranga Rao Committee of Andhra Pradesh the amount of land tenancy in the state in 2006 was 50%. Reserve Bank of India conducted a survey in coastal Andhra Pradesh and found that approximately 60-80% of farmers were associated with land tenancy. Commission on Farmers’ Welfare of Andhra Pradesh is stating that there is no legal record regarding land tenancy, and according to the concerned circle approximately 1/3rd of the total agricultural land is under this land tenancy. In case of Bihar, the NSS of 1991 found only 3% of land under lease holding, but, in an essay titled as “International conference on Land Poverty Social Justice & Development” writer Ravi Shrivastav (2006) showed that its amount was 1/3rd of the total land. D. Banerjee, the chairman (2006-08) of Bihar land reform commission, said that there is no information regarding batiadar or sharecroppers in Bihar. According to a conservative calculation near about 35% land is used in batiadari or sharecropping. In the 1/3rd of the remaining land 3.5% is owned by large and medium landowners. They are protecting tax-based feudal income and social hierarchy. He pointed this inequality and this intense exploitative batiadari system as a barrier in front of agricultural development in Bihar. D. Bandyopadhyay recommended providing 2-3 bigha of ceiling-excess land to the poorest agricultural workers. He also recommended to secure the rights of sharecropping that was achieved as hereditary profession, and requested to pass an official law that will ensure the sharecroppers 60% (in case the landowner bears the production cost) or 70-75% (in case the sharecropper bears the cultivation cost) ownership of the cultivated product. In 2009, Nitish Kumar, the chief minister of Bihar, ignored this recommendation by forming arrangements with rural vested interests.

Proper research is needed to validate the claim that the production has increased due to the tendency of transferring the lease holding of land from small landowner to the large farmers. It might be related with exploitative moneylending system, where wealth is being captured by lease holding of land from a debt-ridden farmer at a very low rate. However, the productivity is not increasing. Centering the distribution of tube-well water in rural areas the big landowners control the irrigation water, and hold lease of lands at very low rates. The small and marginal farmers are losing everything in this exploitative cycle. Various examples across the country are bringing this stark reality in the forefront.

H. S. Shergill Report, the EPW article of Anita Gill (2006), writings of N. Shyamshundar and S. Rao on the situation of Andhra Pradesh, Priya Basu’s book “Improving Access to Finance for India’s Rural Poor” (World Bank, 2006) – all these sources clearly state that the non-institutional loans (from money lenders, traders etc.) of Indian farmers amounts double to their institutional loans (from banks, cooperatives). According to the NCAER survey of World Bank, 21% rural loans in Uttar Pradesh and Andhra Pradesh are institutional, and the percentage of non-institutional loans is 40%. In the Situation Assessment of NSS in 2012-13, it was found that to increase the production-related wealth the farmer families spend 4% on an average. However, as their income was even lesser than this, they were forced to borrow money for this purpose. Even if we do not consider increased production, 87% debt-ridden farmers are struggling for their mere existence in order to maintain normal productivity.

Between 1997 to2003, due to such agrarian crisis the farmers were forced to take loans just to survive. A high-level committee for savings and investments measurement showed that, in 2002-03 savings and investments were like daydreams to farmer families. Rather, for survival they were forced to dismantle their savings. In this particular year, the total amount of loan taken by these families was equivalent to 3.3% for the GDP of same year. These facts proved that moneylending business is a huge barrier in front of production-related investments in agriculture. A survey of World Bank NCAER is showing that 10-20% bribes are required to get institutional loans. One has to wait for near about 10 months to get a loan, and even after that one needs to mortgage their land, which most of the farmers cannot afford. On the other hand, there is no need to mortgage land while getting loans from money lenders. In most of the cases the labor of the farmers are shown as collateral. In this way a bond is formed between loan and labor, where farmers put own labor as condition. The borrowers are landless farmers or marginal farmers in almost all cases. In case of dalits, in 1991 they used to get most of the loans from commercial banks, but over the years the situation changed, in 2002 the usury capital took the place of commercial banks. In rural India 21% farmer families belong to dalit mass, though, they own only 9% of the total land.This shows the problem of landlessness among dalits. Let us go through a revealing example to see how caste system protects class exploitations. In Maharastra, people of the ruling class mostly belong to the Maratha sect. Only 30% of the farmers are Maratha in this state but in Maharastra, 75% land, 71% cooperatives, 86 among 105 sugar factories, and 54% educational institutes are in the hands of Marathas. In the past 40 years, 17 elected chief ministers and 55% legislators are Marathi. This caste domination in rural India is a part & parcel of pre-capitalist exploitation.

For the last three decades Indian agriculture is directed towards serving the imperialist globalization and liberalization, the tight noose of which pushed the Indian farmers in a grave situation they are gasping. Debt-ridden conditions, loss of work, severe agricultural deficit, landlessness and extreme inequality in distribution of land, opulence of usury capital, embezzlement of most of the agricultural surplus by the nexus of jotedar-money lender-traders – these are the primary tendencies of the present agricultural relations.

Seeing few changes in the pre-capitalist production relations in Indian agriculture between 1970 and 1990, it is ridiculous to ignore the imperialist penetration that have strengthened the neo-colonial exploitations in Indian agriculture in the next three decades. It is very clear that imperialism is again restructuring the backward pre-capitalist production relations in Indian agriculture in order to protect the semi-feudal system. Thus, in this period, the primary task is distributing land and dismantling the pre-capitalist production relations. Considering any other task as the primary one is equivalent to strengthening the hands of the state.

[The author is a physician and activist and editor of the Parichay magazine in Kolkata.]


%d bloggers like this: