The Impact of Indian Farmer Debt on Suicide Rate

By: Sara Bannach

            Since its development by scientist Norman Borlaug in the 1940s, the agricultural Green Revolution has been touted as the solution to a multitude of problems, including world hunger, increasing food problems, and lack of economic development in impoverished nations.  And, within the last half century, the Green Revolution has achieved just that; it has led to economic growth in countries such as Malawi (Brassil), Pakistan (Dwyer), and, as addressed earlier, has spurned much scientific advancement in the field of agriculture.  In India specifically, the impact of the Green Revolution has in general been quite similar to other developing countries in terms of development.

But, in recent years, a new, sinister side of the Green Revolution has appeared.  Since the early 1990s, hundreds of thousands of poor, small scale farmers have killed themselves.  Indeed, farmer suicide has become so prevalent in India that it has been described as “a spectre haunting India” (Meeta 17).  The cause of this phenomenon has been heavily debated.  However, upon examination, it is clear that there is a direct link between suicide rate and indebtedness in India’s farmer population.  The Green Revolution’s expensive and advanced technologies have become a heavy financial burden for Indian farmers, caused mostly by India’s liberal economic reforms in the early 1990s.  Though extreme, suicide is the only escape from indebtedness for thousands of Indian farmers; only death can relieve the stress and pain of constant financial worry.

INDIA’S GREEN REVOLUTION

The Green Revolution took rural India by storm after its implementation; as an agricultural practice and as an ideology, the Green Revolution gave rise to a period of rapid and dramatic changes in Indian agriculture.  After receiving funding from organizations such as United States Agency for International Development (USAID) and the Rockefeller Foundation, the Indian central government decided to implement new agricultural methods beginning in 1962 (Parayil 745).  The extensive Green Revolution modifications included “extensive use of farm machinery…hybrid (high yielding) seeds, energized well irrigation…[and the] use of high fertilizer does and pesticides” amongst other hitherto unutilized farming methodologies (Dhanagare AN137).  Undoubtedly, these technological advancements initially seemed starkly alien to Indian farmers who were so used to husbandry techniques of old.  Moreover, the Indian government had to convince farmers that the new methods and technology would unfailingly produce food for their families (Chakravarti 320).  As a response, in 1965 the Indian government launched extensive education programs for farmers, using media such as radio, newspapers, and cinema  (Parayil 751).

The re-education effort ostensibly worked, and Green Revolution ideologies spread like wildfire through Indian agricultural communities.  After offering farmers a subsidized “test run” crop of high-yielding variety seeds, the demand for these imported seed varieties skyrocketed (752).  As discussed in “Punjab and the Indian Green Revolution,” farmers quickly began to realize the potential profitability of adopting technologies such as HYV seeds (Roberts). The HYV seeds were regarded as a miracle; they produced yields that were double or even triple that of old-fashioned seeds.  Indeed, government studies claimed that in comparison with the “pre-HYV period” between 1961-1965, food grain production increased by 19.1% in the “post-HYV period” between 1967-1973 (Dhanagare AN137).

The economic impacts of the Green Revolution in India have been rather astonishing.  Prior essays in this volume detail the expansion of agriculture due to the Green Revolution (Roberts) as well as its impact on abating hunger in India’s impoverished regions (Parikh).  In broad strokes, the Green Revolution on the whole has had a positive impact in decreasing worldwide food prices as well as in aiding development in impoverished countries, including India (Evenson & Gollin 760).  However, economic affects aside, the Green Revolution has inadvertently led to a increase in farmer indebtedness, which is in part due to the liberalization of the Indian economy in the early 1990s.

ECONOMIC LIBERALIZATION

Following the revolution in the agricultural sector, India embarked on a larger venture—revolutionizing her economy.  After gaining independence from Great Britain in 1947, India’s first prime minister, Jawaharlal Nehru, elected to adopt an economic ideology influenced by the socialist policies of Soviet Russia (Singh, et. al 61).  For the next thirty years, the state controlled the majority of industrial production, infrastructure, and defense and imposed large tariffs on imports and exports, creating nearly impenetrable barriers for foreign investment (61).  Moreover, Nehru and his successor Indira Gandhi’s economic policies “pampered organized labor” to the extent that production decreased significantly (Das 3).  As a result, average per capita income between 1950-1980 increased annually by only 1.3%; in contrast, neighbor and fellow developing country China grew at a rate of 3% during the same period (4).

By the 1980s, the need for economic reform in India had become wholly undeniable.  In 1985, Rajiv Gandhi was elected Prime Minister, and within a month he announced “the first far-reaching [economic] reform” since India’s independence (Gerring, et. al 1741).  These reforms, which included “de-regulation, import liberalization, and easier access to foreign technology,” were decidedly radical in comparison with the “inward looking” and “protectionist” policies of years prior (1741).  Although Gandhi’s reform agenda led to a 4.3% increase in growth, the policies were not implemented properly and proved to be wasteful (Das 5).  By 1990, India had a deficit of $10 billion and inflation was at a rate of 13% annually (Joshi & Little 1). Once again, India found herself on the brink of financial catastrophe.

The true economic revolution in India came in 1991 after the election of Prime Minister Narasimha Rao.  With the guidance of his financial minister Manmohan Singh, Rao rapidly instituted a series of liberal reforms aimed at “opening up…the private sector, foster[ing] a competitive environment…[and] opening up to foreign investments” (Singh, et. al 61).  Specifically, the new policies included 18% currency devaluation, a sharp 135% drop in tariffs, and a dramatic relaxation of foreign participation in the private sector, amongst others (Kaplinsky 683).

Though drastic, Rao’s strategy seemingly worked.  In fact, in the fiscal year following the economic liberalization (1992-1993), India’s national GDP jumped from 1.3% per year to 5.6% (Ahluwalia 68).  Moreover, the reforms transformed India—once notorious worldwide for its staunch protectionist policies—into a burgeoning market for foreign investment. The nine years between 1991-2000 ushered in $67 billion from foreign companies, primarily in telecommunications, automobiles, and consumer goods such as soft drinks (Nagarj 1710).  India’s growth has continued since then; today, the International Monetary Fund lists India’s economy as 10th in the world by nominal GDP (IMF).

Clearly, Rao’s reforms must have worked some sort of magic on the country that was about to declare bankruptcy some 20 years ago.  But while India’s cities were bursting at the seams with foreign product and capital, what was happening to the rural farmers?

SUICIDES

In the past twenty years, suicide has become nothing short of an epidemic amongst Indian farmers.  Between 1997-2006, 166,304 farmers committed suicide (K. Nagaraj 7).  In the four years between 2001-2005 alone, almost 87,000 farmers in India took their own lives (Mishra 6).  Furthermore, farmer suicides account for 20.9% of all suicides in India (K. Nagaraj 14).  Farmers have been committing suicide at a higher rate than the Indian population in general.  For instance, between 1995 and 2001, the suicide mortality rate per 100,000 in male farmers jumped from 9.7 to 16.2 in comparison with a suicide mortality rate of 12.5 to 14.0 for the general Indian male population in the same period (Mishra 1568).  Moreover, small-scale farmers, typically amongst the poorest in rural areas, are more likely to commit suicide.  In a study conducted in two of India’s largest agriculturally-based states, 68% of all farmer suicides were committed by small-scale farmers (Mohanty 253).   Most shockingly, journalist P. Sainath claims that since 2003, the average farmer suicide rate amounts to one farmer committing suicide every 30 minutes (“Nearly 2 lakh farm…”).  The statistics alone are quite devastating.  But the numbers also beg the question: what kind of devastation are India’s farmers experiencing to prompt such drastic action?

Despite the abundance of scholarly publications about the issue within the last decade, there is no unilaterally accepted cause of Indian farmer suicide.  This is partly due to the fact that in official reports the Indian government has attempted to downplay broad causes of farmer suicide and instead attributes the outbreak to individual-based factors such as mental health or addiction (A. Das 27).  Srijit Mishra remarks in his statistical study on farmer suicides that this practice “conceals more than it reveals,” since “suicide [is] a multifaceted and complex phenomenon” (1569).  Nevertheless, one explanation has recently come to the forefront of scholarly discussion on the topic—the massive, inescapable debt that droves of Indian farmers are shouldered with.  In order to understand how indebtedness impacts farmer suicide rate, one must first look to the recent history of the financial sector in India.

DEBT

The sweeping liberalization reforms of the 1990s ushered in the end to the era of plentiful monetary resources available to India’s farmers.  Shortly after the implementation of Green Revolution ideologies, the Indian government nationalized commercial banks in 1969.  In an effort to assist rural farmer populations, the nationalization initiative attempted to “expand rural branch networks” as well as increase and subsidize agricultural credit (Binswanger & Khandker 236).  Indeed, the Indian government made investment in agriculture a priority.  A goal of 33% of all funds available for lending were allocated to agriculture in 1975, and by 1979, the target rate was raised to 40% (Shah et. al 1355).  Between 1970-1990, the endeavor resulted in “a rise in the real wages of agricultural labor” as well as a reduction in “aggregate poverty…and inequality in the economy” (1356).

However, after the economic reforms of 1991, India’s financial sector also experienced extensive changes.  The initiative advocated for a discontinuation of rural bank expansion in order to emphasize profitability as a priority; this ideological re-focusing was intended to encourage foreign investment (1356).  Rural banks were given permission to relocate branches that had been “consistently making losses for three years,” and as a result, between 1996-2003 over 450 rural bank branches had closed or re-located to more profitable urban or semi-urban regions (Bose 4).  Furthermore, beginning in September 1992, rural banks were allowed to finance non-target groups up to 40% of their incremental lending; this number was increased to 60% in 1994 (5).  In contrast with the policies of only thirty years prior where agriculture ranked highest amongst target lending groups, poor Indian farmers found themselves at the “bottom of the barrel” in terms of lending.

It is no wonder, then, that farmers have turned to unofficial and oftentimes expensive sources of funds in order to keep themselves afloat, regardless of debt they may incur.  In India, informal finance systems operate on a system of mutual trust between the borrower and the lender, and they offer anytime doorstep service, deposits of any amount, and no questions asked credit (Dasgupta & Rao 206).  These microfinance institutions, which include any informal financial system such as self-help groups, have filled the gap that the formal financial sector has left; the convenience and accessibility of their services make them extremely attractive to India’s rural poor (208).  However, informal finance comes at a high cost.  In order to pay for the legwork and the risk taken in lending out money informal finance institutions charge obscenely high interest rates (Flintoff).  For instance, in two of India’s largest states, informal lenders have charged an average interest rate of 48% annually compared with an average interest rate of 12% annually that formal finance institutions charge (Basu & Srivastava 1749).

Furthermore, informal lending systems have disproportionately targeted the poorest of India’s rural farmers, creating an even heavier burden of debt.  While 44% of large-scale farmers have access to formal credit, 87% of small or landless farmers do not (1749).  According to a field survey conducted by B. B. Mohanty, as of 2005, 83% of small-scale farmers have reported lending from informal sources with an average debt to asset ratio of 69% (256).  This figure is a stark contrast with the average 21% debt to asset ratio of all farmers in India (256).  Thus, the poorest of India’s farmers are not only merely indebted to the only finance institutions available to them; they are nearly totally under water.

In this way, it was the liberalization of India’s economy that prompted farmer debt to become a ubiquitous issue in rural farming communities.  After 1985, the Indian government reduced its investment in the agricultural sector by 60%, despite the fact that 25% of India’s national GDP derives from agriculture (Iyer 434).  The prices of materials required for the technologically advanced farming processes—namely fertilizer, pesticides, diesel fuel, and irrigation systems—began to rise by as much as 113% without a corresponding rise in crop prices (434).  Farmers, especially the poorest, had no choice but to turn to outside sources of money in order to pay for their livelihood.  Additionally, while the Indian central government was attempting to extensively adopt foreign economic policies, there was no concerted effort to educate the farmer population of the intricacies of these changes.  For instance, as of 2007, 71% of Indian farmers did not belong to a cooperative and only 18% were purportedly aware of alternatives to harmful, chemically based fertilizers such as bio-fertilizer (Meeta 19).  In this way, the rural farmer population has become not only ignorant, but also unable to help themselves due to lack of resources and rising costs.

Psychologically, the burden of debt weighs heavily on the minds of impoverished Indian farmers, causing intense emotionality to which suicide is viewed as the only escape.  In modern psychology, suicide is “widely regarded to be the result of individuals’ inability to cope with sudden and cataclysmic changes in socio-economic conditions” (Sridhar 1559).  For many farmers in India, this fall from grace is exactly what contributes to suicide as Leemamol Mathew argues in the article, “Coping with Shame of Poverty: Analysis of Farmers in Distress.”  According to Mathew, shame (the feeling of being deficient in some regard as a human being) is present amongst the impoverished of all societies due to their inability to “fully partake in society due to lack of resources” (387).  Indeed, one of the primary factors contributing to distress reported by Indian farmers is financial crisis, including indebtedness (392).  Hence, Mathew contends that in Indian farming communities, suicide is the ultimate coping mechanism for shame; death will ultimately prevent any further distress caused by feelings of shame (399).

THE ONLY ESCAPE

Hence, it is apparent that debt caused by costly lending from microfinance institutions correlates highly with the marked increase in farmer suicide.  As aforementioned, farmers have been forced to adopt modern and expensive farming techniques as a result of the implementation of Green Revolution ideology.  While the Indian government supplied physical and monetary resources to aid in the transition during the 1970s and 1980s, this practice was halted with India’s economic liberalization in 1991.  Farmers in rural areas were suddenly struggling to cope with the fiscal burden of the Green Revolution.  At the same time, India’s rural banks ceased to expand into rural areas in favor of urban centers, since population centers ostensibly offered greater profitability, especially from foreign investment.  As a result, rural farmers, especially small scale ones, were driven to seek credit from high-interest microfinance institutions.  However, farmers eventually found themselves unable to pay back the high interest loans because crop prices had not increased along with costs.  Indebtedness in turn causes shame, a psychological burden that many rural farmers could not cope with.  Thus, suicide—oftentimes the only escape from insurmountable debt—has increased sizably in the past two decades.

Suicide in the developed world is often referred to as “a permanent solution for a temporary problem.”  But for impoverished Indian farmers, the ‘problem’ is not ephemeral.  For the majority of rural farmers, there is no escape from indebtedness, no resource to turn to, and no hope for change. In this way, debt has become the “spectre haunting India,” and without drastic reform, it not a ghost that is apt to exorcised any time soon.

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