Musings on Agriculture in Maharashtra

Anukool Chavhan Founder, Asmita Agribusiness 4/16/2013

Contents
I. II. Maharashtra at a Glance....................................................................................................................... 3 Major Crops & Cropping Pattern .......................................................................................................... 7 Introduction: ............................................................................................................................................. 7 Cropping Pattern:...................................................................................................................................... 8 Performance of the Agro Sector: .............................................................................................................. 9 III. Irrigation & Associated Controversy ............................................................................................... 11

Introduction: ........................................................................................................................................... 11 Irrigation Potential and Actual Area Irrigated: ....................................................................................... 12 IV. Agricultural Finance ........................................................................................................................ 14

Introduction: ........................................................................................................................................... 14 1. 2. V. Organized Finance:...................................................................................................................... 14 Unorganized Finance: ................................................................................................................. 15

Analyzing Farmer Suicides .................................................................................................................. 16 Introduction: ........................................................................................................................................... 16 Scenario in Maharashtra: ........................................................................................................................ 17 Socio-Economic Strata of Farmers Committing Suicides: ................................................................... 17 Investigating Reasons for Farmer Suicides: ............................................................................................ 18 Microscopic Analysis: .......................................................................................................................... 18 Macroscopic Analysis: ......................................................................................................................... 19 Non-Availability of Institutional Finance:........................................................................................ 19 Low Irrigation Penetration: ............................................................................................................. 19 Regional Politics: ............................................................................................................................. 20 Lack of Quality Inputs and Extension Services: ............................................................................... 21 Lack of Post Harvest facilities:......................................................................................................... 22 Indirect Causes: ............................................................................................................................... 22

VI.

Policy Suggestions ........................................................................................................................... 23

I.

Maharashtra at a Glance

The state of Maharashtra was formed in 1960 and occupies the central and western region of India. It is the second largest state in India both in terms of population and geographical area (3.08 lakh sq km). The State has a population of 11.24 crore (Census 2011) which is 9.3 per cent of the total population of India. The State is highly urbanized with 45.2 per cent people residing in urban areas. The State has 35 districts which are divided into six revenue divisions viz. Konkan, Pune, Nashik, Aurangabad, Amravati and Nagpur for administrative purposes. The State has a long tradition of having statutory bodies for planning at the district level. For local self-governance in rural areas, there are 33 Zilla Parishads, 351 Panchayat Samitis and 27,906 Gram Panchayats. The urban areas are governed through 26 Municipal Corporations, 219 Municipal Councils, 7 Nagar Panchayats and 7 Cantonment Boards. Mumbai, the capital of Maharashtra and the financial capital of India, houses the headquarters of most of the major corporate & financial institutions. India's main stock exchanges & capital market and commodity exchanges are located in Mumbai. The gross state domestic product (GSDP) at current prices for 2011-12 is estimated at ` 11,99,548 crore and contributes about 14.4 per cent of the GDP. The GSDP has been growing at a rapid pace over the last few years. Presently industrial and services sector both together contribute about 87.1 per cent of the States income. The agriculture & allied activities sector contributes 12.9 per cent to the States income. The State has 226.1 lakh hectares of land under cultivation and area under forest is 52.1 lakh hectares. Numbers of irrigation projects are being implemented to improve irrigation. A watershed mission has been launched to ensure that soil and water conservation measures are implemented speedily in the non-irrigated area. Animal husbandry is an important agriculture related activity. The States share in livestock and poultry population in India is about 7 per cent and 10 per cent respectively.

II.

Major Crops & Cropping Pattern

Introduction:
In the last few years the Indian economy has been marching towards becoming an economic superpower, yet, there is no denying that this welcome surge in the economy is accompanied by stagnation, even retrogression, in the agriculture sector. The setback to agriculture at the national level has been reflected in Maharashtra as well. There are nine to ten districts (out of 33) in Maharashtra where the per capita income is 35 to 40 per cent lower than the national average. While the proportion of population below the poverty line is around 27 per cent at the national level, this proportion is actually higher at around 30 per cent in Maharashtra. While the share of agriculture in the overall GDP has fallen to around 17.5 per cent in 2007-08 at the national level, the same has fallen in Maharashtra to only around 12 per cent. While at the national level, irrigation is around 38 per cent of the cultivable land, the same in Maharashtra is only around 17% (13.4% according to independent sources). In terms of yield per acre, the State of Maharashtra is ranked 14th, 16th, or 18th for most crops barring the exception of banana, grape and sugarcane. In other words, the much-needed rejuvenation of the agriculture sector at the national level is necessary even more so for the State of Maharashtra. In Maharashtra, agricultures contribution to net state domestic product in current prices has reduced from 40 per cent in 1960-1 to 12.4 per cent in 2011-12 whereas as per the 2001 census 55 per cent of the total workers are either cultivators or agricultural labors. During 1993-4 to 2003-4, the linear trend growth rate of Maharashtras Gross State Domestic Product (GSDP) at 4.8 per cent per annum was lower than that of Indias Gross Domestic Product (GDP) at 5.8 per cent per annum. During the 11 th Five Year Plan (FYP), an average agricultural growth rate of 4.3 per cent was achieved. The eight major crop groups in terms of gross area under cultivation are Cereals with nearly half of it under Jowar, Pulses, Fiber (mostly Cotton), Oil Seeds (nearly half of it under Soybean), Sugar cane, Fruits and Vegetables, Condiments, Spices, Drugs and Narcotics etc. There are four divisions in Maharashtra indicating the crop specialization. In which, Western Maharashtra consists Sugarcane, Wheat, Onions and other irrigated crops, Konkan region is famous mostly for Paddy and Fruits, Marathwada consisting Cotton, Pulses and Oil Seeds while Vidarbha cultivating mostly the Cotton, Arhar and Soybean. Western Maharashtra is more irrigated as compare to rest of the Maharashtra. As a result, the income of the farmers of the Western Maharashtra increased and thereby standard of living through employment generation in agriculture sector i.e. Animal Husbandry, Dairy, Poultry and Goat Farming. Also the political leadership of Western Maharashtra has the greater say and dominance in the state policy as compare to other regions of the state. It is one of the reasons of the agricultural development of the region. The successful organization of co-operatives also strengthened the efforts of the farmers in Western Maharashtra. However, the co-operative movement did not acquire expected success in Marathwada and Vidarbha regions of the state.

Cropping Pattern:
The trends in cropping pattern for major crops in Maharashtra can be summarized as below:

Performance of the Agro Sector:

Admittedly, as any developing economy makes a transition towards a developed status, the share of its agriculture sector in GDP declines. This is borne out by the accumulated experience worldwide. However, in India the rate of decline has been abnormally rapid. Furthermore, going by the experience worldwide, pari passu with fall in the share of agriculture in GDP, the proportion of population dependent on agriculture also declines. This phenomenon does not seem to have occurred in India to any significant extent. Illustratively, while in 1951, nearly 75 per cent of the Indian population was dependent on agriculture, nearly two-thirds of our population continues to depend on agriculture for subsistence even today. Inevitably, this anomaly has led to widening of disparities as between rural vs. urban or Bharat vs. India. The agriculture sector in India has remained largely insulated from the comprehensive reforms initiated in the aftermath of the unprecedented macroeconomic crisis of 1991. Inevitably, this has been reflected in a widening gap between the growth rates of agriculture, industry and services as depicted in the Table below:

Public Investment in agriculture has consistently been falling. Illustratively, the share of the Agriculture and Allied sector averaged around 13.1 per cent during the first 5, Year Plans (up to 1980). In contrast, for the next 5, Year Plans (up to the 10th Five Year Plan), the share of Agriculture and Allied sector averaged only 5.4 per cent. The private investment pattern has followed suit. Decelerating public and private investment in agriculture has invariably led to falling rates of usage of agricultural inputs as depicted in following table:

As a combined effect of above phenomena, the yields of all major crops in India are below the world average of major producing countries.

Decelerating agricultural growth rate, falling productivity of the farm sector, surge in food grains prices, reduced per capita food grain availability, widening ruralurban divide and above all, the alarming increase in the incidence of farmers suicide, all point to the imperative need for a comprehensive set of measurers for rejuvenation of the farm sector and for farmers on a scale that could possibly constitute the Second Green Revolution. Unless concerted efforts are made in this direction, urgently, there is a real danger of social instability, which would inevitably jeopardize the sustainability of the overall GDP growth momentum. The much-needed rejuvenation of the agriculture sector at the national level is necessary even more so for the State of Maharashtra.

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III. Irrigation & Associated Controversy

Introduction:
Irrigation plays an important role in increasing the productivity of agriculture and making it profitable and sustainable. Irrigation can be from dams (lift, canal, etc.) or groundwater (wells, bore wells, etc.). Maharashtra is the state with the largest number of big dams in India: the state has 1845 large dams, which is about 36% of Indias total number of dams. Incidentally, the second ranked state in terms of number of large dams, namely Madhya Pradesh, does not have even half the number of large dams that Maharashtra has. Just goes to show the dominance of big dam agenda in Maharashtra. 92% of the Maharashtra dams are exclusively for irrigation, an additional 4.5% dams have irrigation as one of the objectives, along with other objectives like water supply, hydropower or flood control. Over 40% of Indias under construction dams are also in Maharashtra. The state has spent about Rs 75000 crores over the last decade and will need to spend about Rs 76000 crores to complete the under construction projects. So the size of the sum involved is more than Rs 150 000 crores if all the projects were to be completed as envisaged now. According to Government figures, the net area irrigated in Maharashtra in 1999-2000 was 32.96 lakh ha, which in the latest reported year of 2009-10 is 32.54 lakh ha. So in this whole decade, there is no increase in net irrigated area in the state, when the state has spent over Rs 75000 crores in the period. So after spending all this money the state has not increased irrigated area at all. Moreover, in just five out of this ten year period (i.e. 2005-06 to 2010-11), the state economic survey for 2011-12 says, subsidies have been doled out to provide drip irrigation in 1.95 lakh ha and for sprinkler irrigation in 4.17 lakh ha, thus covering a total area of 6.12 lakh ha in these five years at an expense of Rs 1134.82 crores. This expenditure was also supposed to help save water use in irrigation and thus provide additional water for irrigating more areas, but even that has not happened. The ratio of gross irrigated area to gross cropped area for 2008-09 in the State was 17.7 per cent, which was much below the National level ratio of 45.3 per cent. So the state having the largest number of dams in India, almost all of which are supposed to be for irrigation, performs 60% below national average in terms of proportion of area irrigated.

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The graph above is based on the figures given in the Economic survey and show the irrigated area for the last decade, for ground water irrigation, Irrigation by other sources (this category includes major, medium, minor (state and local level as classified in Maharashtra)) and also total net and gross irrigated area in the state. The flat graphs for all the four sets of figures and for whole of the decade and particularly the bottom graph which include irrigation by Major and Medium irrigation projects tell the story of lack of growth in area during the period.

Irrigation Potential and Actual Area Irrigated:

Table-2 presents information about completed & on-going state level as well as local sector projects. Total 47.37 L. ha potential has reportedly been created up to June 2010 through state level completed projects spending Rs. 48500 Cr. Similarly, 14.20 L. ha potential has been created through 65199 local sector completed projects. About 750 state level projects are still under construction & it is estimated that around Rs.75000 Cr. would be their balance cost.

Theoretically speaking, Irrigation Potential is said to be CREATED only when the project is complete. MWIC in its report (Vol.-1, Para 5.7, `Completing incomplete projects') has defined Completed Project. As per that definition completing a project means following: 1. Actual handing over of the project from construction organization to management organization as per the technical circulars of WRD, GOM 12

2. Verification of design carrying capacity of canals & distribution network by actual flow measurement and issuing formal certificate regarding the same. 3. Completion of Techno-Socio- Economic-Legal (TSEL) processes for proper O & M of the project. 4. Formal acceptance of Project Completion Report by WRD,GOM 5. Formal issuance of notification by WRD, GOM to declare that project is complete & then official handing over of project to the State/Nation. MWIC further says that a project is said to be complete if it achieves the objectives assumed in its design. In short, what matters is completion of processes & thereby achieving results & not mere completion of construction! If this definition of completed project is to be adhered to then there is hardly any irrigation project in Maharashtra which is complete in the truest sense of the term. It is an unfortunate fact that in most of the projects, irrigation potential is declared as CREATED even if the canals & distribution network and works related to command development are incomplete.

Actual Irrigated Area (AIA) Data of AIA for last 14 years is available in ISRs. That data is presented in Table above. The following inferences can be drawn: 1. There is no apparent correlation between variation in live storage & area irrigated. 2. AIA is significantly less as compared to CIP & Total Cultivable Area. a. Average AIA (Canal + well) is 53.7% of CIP. b. Average AIA (only canal) is hardly 37.3% of CIP. c. Average AIA (Canal + well) is 9.4% of Total Cultivable Area. d. Average AIA (only canal) is 6.4% of Total Cultivable Area. Prima facie, things look misleading with the usage of CIP instead of AIA. However, almost all government documents use CIP and the increase in it over the past years without mentioning the stagnation in AIA despite heavy investments in large scale irrigation projects. 13

IV. Agricultural Finance

Introduction:
Most of the farmers are not in a position to fund their entire farming costs through available cash. Thus, most of them depend on timely credit to procure inputs for farming. The source of credit could be organized (banks, SHGs, Credit Society, etc.) or unorganized (moneylenders, relatives, etc.).

1. Organized Finance:
Financial assistance is provided to farmers by way of short-term loans, credits, etc. by government through various banks and co-operative agencies. The National Bank for Agriculture and Rural Development (NABARD), the apex bank for agricultural & rural development in the country, plays pivotal role in development of agriculture. The activity wise loans disbursed by Commercial Banks (CB), RRBs, MSCB/DCCB/ LDB are given in Table below:

The financial institutions directly associated with agricultural finance at grass root level in the State are Primary Agricultural Credit Co-operative Societies (PACS) extending short-term crop loans to their cultivator members. During 2011-12, amount of loans disbursed was less by five percent compared to the previous year. Out of the total loan, ` 4,035 crore (53 per cent) was disbursed to small and marginal farmers. The year wise loan advanced to farmers by PACS is given in the following Table:

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2. Unorganized Finance:
Unorganized Finance is prevalent in the rural regions despite the high interest rates as it involves no paperwork and the cash is readily available. Farmers depend on the local sahukar (moneylender) for such informal loans. These loans may be for farming inputs or any other personal reasons like medical emergency, marriage, etc. Informal loan transactions could be in dedhi. The debtor has to return the loan around harvest (within four to six months) and pay Rs.150 for loan of Rs.100. Similarly, there is sawai (payment of Rs.125 for loan of Rs.100). Another popular form of loans for agricultural and social purposes is at an interest rate of Rs.10/Rs.5 per month. In this case the interest is calculated after the principal is returned. For a loan that is repaid in 4-6 months, Rs.10 interest is similar to dedhi whereas Rs.5 interest is similar to sawai. As against this, loans from formal sector cumulate over time and the absolute difference between amount taken and amount repaid can become higher than dedhi/sawai. For instance, at 14 per cent compound interest per annum, non-payment of loan for a little more than 3 years (say, 38 months) will be higher than dedhi and non-payment for 2 years will be higher than sawai. A conventional form of giving loan is through mortgaging of land. Creditors now consider it risky because fatality like suicides can lead to cancellation of such contracts. They have come up with a new design. They insist on sale of land with a verbal (not legal) promise that it will be sold back to the debtor after the loan is repaid. If required, legal registration expenses on both counts are borne by the debtor. Land seizure/mortgage was mentioned in 17 per cent of a survey conducted in three districts of Vidarbha. Some of the moneylenders would also be traders. Loan taken could be for purchase of an input and repayment through sale of produce. This leads to forceful buying of produce when the market rates are low, delay in payments of produce, etc. In some cases, the agro input providers (Fertilizer shop owners) are moneylenders. They give inputs to the farmers in the form of seeds, fertilizers and pesticides and charge 3-5% interest per month. This has led to numerous cases where farmers are sold spurious seeds, excess of fertilizers, pesticides, etc. resulting into increased costs and lowering of yields. Loaning money from relatives is also prevalent and the transaction may or may not involve an associated interest depending on the verbal agreement between the two parties.

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V.

Analyzing Farmer Suicides

Introduction:
According to the National Crime Records Bureau (NCRB) data, during the nine year period from 1997 to 2005 nearly 1,50,000 farmers committed suicide all over the country. Of these, nearly 90,000 suicides (60 per cent of the national total) were committed in Maharashtra, Andhra Pradesh, Karnataka and Madhya Pradesh (including Chhattisgarh). These figures also reveal that during the ten year period (1997-2006), the average number of farmers suicide throughout the country was 15,747 per year during the first half (1997-2001) which rose further in the second half (2002-2006) to an average of 17,513 per year. In other words, during the ten year period from 1997 to 2006, there was 11.2 per cent increase in the farmers suicide from the first half to the second half. To put it differently, during the first half of the said decade, the rate of farmers suicide was a suicide every 33.3 minutes which worsened during the second half to a suicide every 30 minutes. The data comparing farmer suicide rates in various states during 2001 are given in the table for qualitative comparison.

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Scenario in Maharashtra:
The first state where farmer suicides were reported was Maharashtra with particular reference to Vidarbha region. Approximately 3.4 million cotton farmers occupy Vidarbha region which includes Akola, Buldana, Washim, Amravati, Nagpur, Chandrapur, Gondia, Bhandara, Yavatmal, Gadhchiroli and Wardha districts. While Maharashtra has been unfairly regarded as the worst possible State in respect of farmer suicides (based on Suicide Mortality Rate analysis: states like Kerala, Goa, Karnataka have higher Farmer suicides per 10,000 population), there is no denying that the number of farmers committing suicide and its ratio to the general population has increased to worrisome levels. By end-2007, even after implementation of the two Packages for nearly one and half to two years, there was no significant decline in the absolute number of farmer suicides in Vidarbha, which is a serious cause for concern. Within the State of Maharashtra, the bulk of the farmers suicides occurred in the Vidarbha region. More precisely, out of the 33 districts of Maharashtra, most of the suicides were in six districts of Western Vidarbha i.e. Amravati, Akola, Yavatmal, Buldhana, Washim and Wardha. Information relating to farmers suicide in the six suicide-prone districts of Western Vidarbha is presented in the Table below. There are two sources of these data: the NCRB and the Government of Maharashtra. NCRB provides information on suicides by farmers and their family members whereas information provided by the Government of Maharashtra relates to investigated cases of farmers suicide.

It can be clearly seen that there are major discrepancies between the information provided by these two sources. Generally up to the year 2005, figures provided by the Government of Maharashtra were considerably lower than the corresponding figures provided by the NCRB.

Socio-Economic Strata of Farmers Committing Suicides:

To delve into the possible socio-economic risk factors that can be identified with farmers suicides a field survey was conducted in the districts of Wardha, Washim and Yavatmal. The survey comprehensively 17

studied 390 farmer suicide deaths from 2001 to 2004. The following conclusions were drawn about the socio-economic strata of the farmers who have committed suicide: In farming families it is mainly the bread-earning men who have committed suicide. The incidence of suicide is almost negligible amongst the landless labors or marginal farmers. Almost 75 per cent of farmer suicides have occurred amongst the farmers with land holding between 2 and 12.5 acres. The incidence of farmers suicide is considerably more among the Other Backward Castes (OBCs); in contrast, the incidence of suicide was minimal amongst the Scheduled Castes (SC) and Scheduled Tribes (ST). Farmers who have committed suicide primarily included those who relied on mono-cropping or those with little or no irrigation facilities and those who did not have supplementary occupations.

Investigating Reasons for Farmer Suicides:

Suicides are a complex interplay of multiple factors. They are acts by individuals, but in a social context. As pointed out by Durkheim (2002, first published in French in 1897), suicide could be because of social isolation/individualism (egoistic) or excess of social integration (altruistic), breakdown of social regulation (anomic), or excess of social regulation (fatalistic). An individual could face a situation where she/he is confronted with a combination of the above possibilities. For instance, changes in policy regime would have an adverse impact on income leading to an economic crisis (anomic), inability to get daughter married in such situation can also be identified with the strict social norms on age and expenditure related with marriage (altruistic and perhaps also fatalistic) and such difficulties can lead an individual to withdraw himself from social activities (egoistic). We will try to analyze the major factors causing high rates of farmer suicides at both microscopic (individual) and macroscopic (policy) levels.

Microscopic Analysis:
For the current study on suicide of farmers, we do not have information on the neurobiological dimension. However, for the specific sub-group of population we can identify some socio-economic risk factors. Different study groups have given a whole range of reasons driving farmers to commit suicide. These reasons in decreasing order or relevance are: Indebtedness - 93 per cent Financial Stress - 74 per cent Family Disputes - 55 per cent Droughts - 41 per cent Adverse effect on social status - 36 per cent Problems relating to marriage of - 34 per cent daughters or sisters Addictions - 28 per cent Health related problems - 21 per cent

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Clearly most of these reasons are overlapping. As a matter of fact, all these reasons can be classified in one of the three groups: 1. Indebtedness 2. Family Disputes 3. Addiction and Health related Problems. Illustratively, indebtedness and consequent financial distress causing damage to social status in turn creating difficulties in arranging marriage of daughters or sisters are overlapping reasons and as such can be classified under a single group of factors: indebtedness. Family disputes constitute the second group, while the third group comprises addiction and health-related problems. Of these three groups, the most dominant one is of course, the indebtedness. In many cases even family disputes or healthrelated problems emanated from economic distress arising from indebtedness. In other words, indebtedness and its attendant economic distress is the main proximate reason behind the suicides by farmers.

Macroscopic Analysis:
Macroscopic factors may not directly cause farmer suicides, but they do catalyze the process to a great extent by promoting the microscopic reasons among farmers discussed above. The major macroscopic factors affecting farmer suicides may be policy related viz. availability of finance, irrigation facilities, regional politics, or social viz. dowry, race for top crop yields, etc. We will try to look into each of these briefly. Non-Availability of Institutional Finance: Financial institutions play a very important role in development of any sector. For several years, however, institutional credit supply to the agricultural sector has not received adequate attention in many parts of Maharashtra. This has inevitably led to private moneylenders entering the rural areas for financing the farmers and in that process exploiting them to a large extent. While providing credit, banks often place a number of undue restrictions on farmers by introducing rigid criteria about season, cropping pattern and the scale of finance. It is imperative to bring in some flexibility in this respect. Presently, the scale of finance is apparently fixed at the District level without any scientific basis. The scale of finance should be planned and structured at the State level rather than at the District level. Government of Indias nationwide agriculture debt waiver during 2008-09 helped to improve financial conditions of the co-operative banks and credit societies. This has increased the credit supply to farmers to some extent, however, much more is left to be done. Unless institutional finance is made readily available to every farmer without much hassle of complex paperwork, the problem of private moneylenders and farmer indebtedness will continue, and so will farmer suicides. Low Irrigation Penetration: Uncertainty and inadequacy are the fundamental characteristics of the Indian monsoon. Variations in the monsoon affect the agricultural production. In Maharashtra, Konkan region has the highest rainfall of 2801mm which is followed by Vidarbha with 970mm during the months of June to September 19

whereas Central Maharashtra and Marathwada get rainfall of 743mm and 706mm respectively. The problem of farmer suicides is found concentrated in the Vidarbha region of the state. Though the average rainfall is of the order of second highest in the state, lack of institutional mechanism to conserve the rain water makes region known for water shortage. Hence farmers have to remain deprived from the benefits of the good rainfall. Conflicts arising from man-made drought are on the rise. Deforestation does enormous damage. Villagers are increasingly losing control over the common water resources. A process of privatization of water resources is apparent in most of the real drought areas. There are now two kinds of droughts; the real and the rigged. Both can be underway at the same time and in the same place. Since the 1998 the actual rainfall has not been in the appropriate proportion in the region. It either has been in excess or acute. In both the situation farmers have incurred heavy losses by double or triple sowing or sometimes the total crop loss. If proper irrigation facilities are made available and robust mechanisms are established to conserve and distribute water (watershed management), farmers can be insulated from climactic shocks. Farm productivity would increase leading to increased net profits. Irrigation would also enable the farmers to take three crops a year thus improving their overall finances and chances of averaging out losses from a particular season. Although the government has declared subsidies on drip and sprinkler irrigation systems as well as electric pumps, the paperwork for these take months to complete and the farmer has to pay the entire amount till the procedure is underway. Most of the farmers find it difficult to invest such large amounts for months at an end. This has lead to less than satisfactory penetration of advanced irrigation technologies to the needy farmers. Regional Politics: Regional politics has played a big role in the lack of development of Vidarbha as against Western Maharashtra which has a much stronger political clout. There are regional disparities on various fronts like credit availability, irrigation, government scheme implementation, etc. This leads to widening of the existing developmental chasm between regions of Maharashtra. Irrigation Until 1950s, the region of Vidarbha was way ahead of other regions of Maharashtra in terms of irrigation facilities. During the last 20 years, however, this position has reversed. The irrigation backlog in Vidarbha, which was 38 per cent in 1984, shot up to 62 per cent by the year 2002. Credit Same is the case with bank credit. In 1995, the institutional credit to agriculture in Vidarbha was 22 per cent of total credit to Maharashtra State, which was exactly same as the proportion of Vidarbhas population to that of the State of Maharashtra. This situation has however, reversed in the last 10 years or so. In the year 2005, the share of Vidarbha to farm credit in Maharashtra was only 13 per cent. Given the inadequate irrigation facilities, the cropping pattern in Vidarbha has remained largely unchanged over the years. Mono-cropping rather than crop-diversification has been the trend. In contrast to Western Maharashtra, the co-operative movement did not take roots in Vidarbha. As a result, 20

supplementary occupations did not develop to the extent desired. Moreover, for traditional cotton crop in Vidarbha much larger scale of finance is applicable whereas in Western Maharashtra, crops such as sugarcane invite relatively larger scale of finance. Consequently, institutional credit to farming in Vidarbha has been of a much lower order than in Western Maharashtra. Benefits of Loan Waiver The benefits of Govt. of Indias Agricultural debt Waiver in 2008-09 were reaped by Western Maharashtra when clearly, the distress in Vidarbha was a major trigger for the waiver in the first place. The following table shows the region wise distribution of benefits:

As seen, the amount payable to farmers was divided between different regions of Maharashtra in an inequitable manner. Illustratively, of the total amount receivable by Maharashtra, 53.8 per cent amount is going to be paid to farmers in Western Maharashtra, whereas the share of Vidarbha was only 20.1. The amount per account holder thus works out to be Rs.27,310 for Western Maharashtra, Rs.20,521 for Marathwada, Rs.16,117 for Vidarbha and only Rs.6,903 for Konkan. Lack of Quality Inputs and Extension Services: The state machinery fails on all accounts when it comes to quality control, distribution and availability of agriculture inputs like seeds, fertilizers and pesticides. Government officers are hand in glove in malpractices like black marketing of particular variety of seeds, linking of products, artificial scarcity of fertilizers, selling of spurious seeds. In 2012, riots had broken out in Marathwada for a particular variety of cotton seeds which was being sold at a premium of 100-150%. The movement of fertilizers is tracked only up to the first point of sale in the district after which there is no transparency about their stock levels with dealers and retailers. Farmers need to roam tens of shops in search of desired fertilizer/seed as there is no clarity on the supply. The agriculture extension departments have failed miserably in taking crop advisory to the grassroots. The farmers are left on their own to take decisions regarding crop selection, seed variety, fertilizer management, pest management and other operational techniques. This has been a major reason for low agricultural yields in Maharashtra and especially in Vidarbha. Crores spent on extension schemes like mobile soil testing vans, study tours, seminars either remain on paper or are targeted at the niche farmers who dont need it. Politicians guised as farmers, going on study tours abroad, is a common sight. 21

In the absence of proper guiding channels, the fertilizer retailer acts as quasi-extension service and guides the farmers which is an obvious conflict of interest. This practice leads to supply-induceddemands and excessive and undue use of fertilizers, pesticides. There have been cases where poor farmers were guided for re-sowing two to three times even when the weather was adverse. This is one of the major reasons for increased indebtedness. Lack of Post Harvest facilities: Vidarbha lags behind in post harvest infrastructure like warehouses, cold storages, etc. This compels the farmers to sell off their produce as soon as it is harvested at lower rates reducing their profitability. There are limited schemes of loans against warehousing receipts like one provided by the Buldhana Urban Co-Operative bank, but the interest rates are too high (1.25% per month) to be lucrative to the farmers. The number of private markets and industrial buyers in Vidarbha is very less. Thus most of the farmers have to sell their produce at the local APMC. These markets have a chain of middlemen (Adatiya, Khareedaar, etc.) resulting in the farmer getting a raw deal for his hard earned harvest. Contract farming and co-operative farming is yet to grow roots in Vidarbha as it has in other regions of the state due to apathy of government machinery and lack of private initiative. Indirect Causes: Huge costs involved in social evils like dowries and marriage ceremonies Lack of health insurance cover and thus financial burden of emergency health care Inadequate crop insurance and failure to sanction claims leading to instability Lack of affordable and quality education which will help divert the excess manpower from agriculture to other sectors Ever-changing import-export policies of the government regarding international agro trade.

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VI. Policy Suggestions

Policy interventions should not be restricted to suicide households. A deeper agrarian crisis can be averted by policy interventions beneficial in overall terms. It will also help reduce suicides. Revitalize rural financial market The credit market needs immediate attention; the formal credit structure should be revitalized. Working Capital This can be for consumption purposes also. It can be operated through Kisan Credit Cards. Investment Capital Care should be taken not to divert loans given for this purpose. There should be strict supervision by formal institutions to prevent such possibilities. Otherwise, repayment will become difficult. Public Private Partnership Industries should be prompted to create a value-chain in agriculture by involving corporate that will work with farmers groups or associations from production to marketing stage. This would lead to a winwin situation where the farmers get quality agro inputs and scientific know-how while the industries get quality harvest directly from the farmers eliminating the middlemen. In the long run, the subsidies granted to industries could be linked to their success in farmer-support. Compensating for Regional backlog The infrastructural backlogs in Vidarbha and Marathwada have been accumulating over years due to the political clout and preferred treatment to Western Maharashtra. This has to be compensated for by setting up an independent body for development of these regions with a separate budget and autonomy to work in co-ordination with various departments like banking, irrigation, roads, etc. Diversification of cropping pattern The important cash crops of Vidarbha are Cotton and Soybean. To reduce the vulnerability, the farmer should have more options and be able to go beyond these crops. Policies that can make diversification of cropping pattern feasible should be put into place. Inter cropping, fitting two crops, crop rotation and horticulture should be encouraged. Better water and land management will also help in attaining this objective. Input quality Inputs in the form of seeds, pesticides and fertilizers sold to farmers could be of spurious quality. There is no regulatory mechanism. In some cases, farmers are advised by traders to go in for a third sowing a case of supplier-induced-demand. The private traders should be regulated. Local non-governmental organizations (NGOs) can be involved in regulating the private trader. Transparency on fertilizer movements and prevalent prices has to be achieved by using technology and media. Along with the

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retailers, the irresponsible officers should be suitably punished to set an example for the rest and curb illegal liaisons. Coupon-based Grants for Fertilizers and Pesticides The Government should distribute coupons for the purchase of fertilizers and pesticides to farmers who are in extremely distressed conditions. The coupon amount should be based on the land holding of the farmers and also on their cropping pattern. The farmer should be able to buy fertilizers and pesticides from any supplier, as and when required. The supplier should be able to cash these coupons from the appropriate Government agency. Insurance schemes The farmers problem is rooted in his exposure to risk yield as well as price shocks. Insurance schemes may be devised to mitigate these. This can be done in three possible ways. Credit insurance can look into the credit default. A fund with contribution from the creditor, the debtor and the Government may be created for this. Appropriate mechanisms to look into its modus operandi should be devised. Crop insurance will be linked with yield risk. Implementation of this should be village and if possible plot of land specific. Theft of crop and loss due to fire or other calamities should be taken into consideration while administering this. The earlier mentioned information bureau could also help in this endeavor. Income insurance will address the poor returns, particularly for marginal and small farmers and also tenants. The poor returns could be because of poor prices, low yields or high transaction costs arising out of low quantity of produce. Water management In the selected districts where agriculture is largely rainfall dependent, strategies to increase irrigation potential (particularly, through watershed development), should be devised so as to provide scope to increase value addition. The Maharashtra Employment Guarantee Scheme (MEGS), the National Watershed Development Project for Rain fed Areas (NWDPRA) and the RIDF can be used for this. Paperwork for subsidies of irrigation and pump sets should be completed in advance within a specified time frame. A coupon could be generated on sanction of the claim, which can then be used for claiming direct subsidy at the time of purchase. This can alter be integrated in the AADHAR based direct transfer of subsidies. Land management Excessive use of fertilizer and pesticides and mono-cropping can affect the fertility of land. Appropriate land management techniques should be devised. This should complement the efforts in improving water management. The MEGS and RIDF can be used for this. Revive agricultural extension In cotton, there is the emergence of new varieties of seeds that makes conventional methods of cultivation redundant. The experience gained over the years is of no use. There is deskilling. The farmer has to upgrade his technical know-how. He should also be abreast with the latest developments in water and land management. An appropriate mechanism to revive agricultural extension is urgently required. Local NGOs can also be involved in facilitating agricultural extension. 24

Encourage organic farming It will be beneficial on two counts - to reduce costs associated with pesticides and fertilizers and reduce the availability of pesticides for committing suicide. We have also observed its successful practice in two cases during our survey. Replication of such experiments should be encouraged. For instance, shifting from inorganic to organic farming will give low returns in the initial two to three years. This acts as a deterrent for marginal and small farmers. Compensating them during initial years would help. This can be done through MEGS. It would be similar to payment of wages to the landowner under horticulture scheme of MEGS. The help provided should also be in terms of technical know-how (agricultural extension), certification & quality control and marketing. The Vidarbha Organic Farmers Association and other similar organization may be involved in this endeavor. Increase import tariff The farmer is exposed to price fluctuations, particularly in cotton, because of global price movements. In the current scenario low domestic price is largely due to huge subsidy by the United States of America (USA), a major exporter, and low import tariff in India. The Government of India may be requested (1) to raise the issue of high subsides in the USA at appropriate forums and (2) to increase the import tariff in Cotton to 30-35 per cent from the current 5 per cent. Price stabilization The Monopoly Cotton Procurement Scheme of Maharashtra has failed in mitigating price fluctuations. Some of the reasons are because of inappropriate functioning of the scheme like payment of additional advance price without looking into market conditions, rent-seeking by office bearers during grading/weighing, involvement of middlemen who take a commission from farmers, delay and staggered nature of payment to farmers and the payment to farmers being linked with loan repayment among others. These failures should be looked into and an appropriate mechanism to control price fluctuation may be considered. It will also help in risk mitigation. Non-farm employment A large proportion of rural population being dependent on agriculture (cultivators and agricultural laborers) indicates that there are not many avenues of diversifying sources of income. Agro-based industries and other non-farm opportunities should be increased. With the current cropping pattern, the agro-based industries can be cotton or oilseeds based. It can be related to organic farming like manufacture of composts, bio-fertilizers and bio-pesticides among others. Public Health The primary health centers (PHCs) should have trained staff and be equipped with necessary material to handle cases of poisoning. This will reduce travel time and save more lives. A complete health check up of the concerned person should be done in the Government hospitals. A specific coupon or identity card should be provided to the person for his health-care, within which there should be a provision for the patient to get cash-less treatment in any Government hospital or in case of an emergency, in any private hospital. Community groups

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Develop a protocol for starting survivor support groups. Form community/farmer groups in rural areas. These groups can discuss farm related and other socio-economic problems.

Socio-religious activities The help of socio-religious organization like The Art of Living or Vipassana may be sought to mitigate the general state of despair among people. Reduce social expenditure One of the reasons for indebtedness is expenses associated with marriages in the family. A related risk factor observed is the difficulty in conducting daughter/sisters marriage when faced with an economic crisis like crop loss. Initiate involvement of civil society to discuss and bring about changes in the society by curtailing huge expenses on marriages and other social functions. Social sector needs Healthcare needs and higher educational requirements also lead to credit requirement and indebtedness. Poor infrastructure also adds to transaction costs in terms of storage and marketing. Poor transportation can also lead to delay in seeking healthcare during times of emergency (including the consumption of pesticides/poison). Appropriate interventions may be designed.

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