A series to highlight crucial points in the second decade of the new millenium: We flag off with how near-zero income for farmers threatened the national economy
By 2010, India was feted globally to tide over the economic recession of 2008 smoothly. At the core of this achievement was retaining demands for consumption that sustained economic growth. A Majority of these consumers are in rural India and most of them also depend on agriculture. This showed the criticality of rural India to the national economy.
But, from the middle of the decade a deep agrarian crisis set in. It pushed some 440 million Indians into an economic abyss. This decade would be remembered for the meltdown of the rural economy while the formal economy as well floundered. India is about to enter into a critical phase.
Here’s looking back at our 16-30 June, 2015 issue for
“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 (National Sample Survey Office) released in February shows that agricultural lending grew by 24 per cent during 2003-13. The agricultural gross domestic produce (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.
Also in the decade
54 suicides in Andhra Pradesh have blown the lid off the social posturing by microfinance companies. Regulations are fleeting and they don’t touch where it hurts most: the high interest rates
Between 2004 and 2014, the average earning of an agricultural household per month was Rs 214 and expenditure Rs 207
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