Economic issues

The image depicts a business tycoon exploiting a poor farmer
who is working tirelessly for small sums of money.(Bloomber Quint)

January 19, 2021

76% of farmers want to give up farming shows a study by The Centre for Study of Developing Societies (CSDS), farmers make up roughly 7.4% of all Indian suicide victims which one average turns out to be 28 farmers each day. The reason? Economic stress caused by soaring debts and plummeting real income. In India the average farmer makes roughly 1.07 lakh rupees ( $1459) yearly, this nadir income has resulted in over 20% of India’s farmers living in poverty.

Adding to that over 52.5% of Indian farmers are indebted and the average indebted farmer owes a principal amount of 107739.09 rupees ($1470) this is nearly an entire year's income. Furthermore, the majority of the farmers due to their financial illiteracy and gullibility coupled with their egregious credit rating are required to pay high interest rates. For instance, 64% of all loans in rural areas have interest rates above 12%. 32% of all loans have interest rates of above 20% the majority of the indebted in rural areas are farmers). These high-interest payments ameliorate the farmer's financial stress and instability. Moreover, it is noteworthy that these are the farmer's whose income is already susceptible to the repercussions of environmental conditions, or pests ruining their harvest, hence their debt is indubitably a problem.

In the recent decade we have seen India's economy grow, peoples' lives improve as well as their incomes, however, we can't say the same for the Indian farmers whose economic plights remain. The average farmer's income from 2013 to 2017 ( which is the most recent survey by a governmental body) grew by only 2,505 rupees a month, this put their monthly income at 8,505 rupees, and that is without factoring in inflation. According to a government survey reportthe share of the interest-free loans in rural areas was 12 per cent during the year 1981, which shrunk to 5 per cent in 2012( the last survey regarding interest-free loans to farmers was in 2012 by a government source ), this reduction in interest-free loans ergo indebtedness has augmented the economic plights of Indian farmers.

Lack of insurance is another adversity Indian farmers are victims to. Only roughly 26% of Indian farmers have any kind of insurance, out of the insured only 5% have health insurance, 2% have accidental insurance, and 5% have vehicle insurance. This insinuates that the majority of India's agricultural households, during a crisis pay out of their pocket. This further aggravates their economic plights.

Lastly, the Indian farmers are one of the most financially discluded Indians. Only 53% of Indian farmers have any savings in financial institutions, one-fourth of them are incapable of utilizing an ATM independently and lastly, 60% of them are unable to use mobile banking without any assistance. This financial disclusion has resulted in farmers not being able to benefit from India's enlarging financial system hence hurting their financial health.

From our standpoint, the genesis of the economic issues farmers face is their illiteracy and their debt. Their economic plights have resulted in myriad bankruptcies hence suicides since the bankruptcy was the genesis of 38.7% of all farmer suicides.

It is well known that their issues need to be resolved, the question is how?. We believe the key to remedying their economic issues lies in ameliorating their financial literacy, the government helping them with their debt and mechanisms being built through which they can get what they truly deserve for their produce.