Indian farmers deep in debt, seek subsidies, help with insurance

By Reuters   March 4, 2016 | 04:40 am PT
Indian government action to increase spending on irrigation and crop insurance is not enough to end a cycle of indebtedness that has led to thousands of farmer suicides, and a complete overhaul of credit and subsidies to farmers is needed, activists said.

Drought in many parts of the country has hit rice, cotton and other crops, and lower world commodity prices have added to the farmers' plight.

More than half India's farming households are in debt, owing banks and moneylenders hundreds of millions of rupees, despite numerous loan write-offs by successive governments.

Tens of thousands of farmers across the country have killed themselves over the past decade, several farmers' lobbying groups said.

Finance Minister Arun Jaitley, who presents the federal budget for fiscal 2016-17 on Feb. 29, has to balance stimulating economic growth with aiding farmers and poorer sections of society.

Farmers' groups have been demanding better monsoon forecasts, bigger fertiliser subsidies and a state-funded insurance scheme for all crops, to help farmers improve yields and help prevent crop failures.

"The need of the hour is a focus on the dying farmer community," said activist Kishor Tiwari, who heads a task force set up to recommend action to tackle farmer suicides in western Maharashtra state, which accounted for more than half of all suicides among Indian farmers in 2014.

"Debt is a core issue, and it needs a long-term plan to resolve it," he said.

While inter-generational bonded labour in the farming community is no longer as common as before, the number of poor and landless workers who are in debt bondage is rising, particularly in agriculture, brick kilns and stone quarries, activists say.

Indian farmers seldom own the land they cultivate, and often take loans to buy seeds and fertilisers. Only about one tenth of India's 263 million cultivators take out crop insurance because of the high premiums.

Unpredictable weather and low crop yields have made farming unviable for many. Financial assistance provided by the government usually doesn't cover the losses, and some farmers have migrated to urban areas for low-paid jobs, even selling their blood to make ends meet.

Tiwari, in a plan submitted to the Maharashtra government, has recommended direct cash subsidies for farmers instead of the current indirect agriculture credit.

He also suggested the central and state governments help underwrite full crop insurance cover and promote the adoption of organic farming methods in drought-prone districts, to help restore soil quality and benefit from the higher price of organic produce, even though yields are lower.

A total of 5,650 farmer suicides were recorded in India in 2014, more than half of them in Maharashtra, according to the National Crime Records Bureau. The states of Madhya Pradesh, Telangana, Chattisgarh and Karnataka also had large numbers of farmer suicides.

The cabinet last month cleared a proposal for the country's first major crop-damage insurance scheme. The government has said it will reduce premiums to be paid by farmers, and ensure faster settlements.

Delays in estimating crop damage and paying claims are a big challenge, said Sunita Narain, director of non-profit Centre for Science and Environment in New Delhi.

The government must encourage the use of new technologies, including remote sensing and mobile-based image capturing systems to improve yield data and claims processing, she said.

"Insurance coverage has to be universal and payouts enough to cover losses," she wrote in a blog.

Farm output contributes about 15 percent to India's $2 trillion economy, and farmers and rural communities are a large and powerful vote bank.

Politicians have often promised to waive farmers' loan repayments, but have not addressed the underlying reasons for their chronic indebtedness, Tiwari said.

"Loan waivers are not the solution; it is like a simple dressing for a cancer tumour. You need to excise the tumour and address the cause of the disease," he said. 

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