Agrarian Distress and Rural Credit: Peeling the Onion

Abstract

Agriculture has remained traditionally the most important economic activity in our country. That a majority of the rural households are directly or indirectly dependent on agriculture is an established fact. It is also fairly well known that the agricultural sector has gone through some crisis in the past few years. While the crisis may be isolated to a few crops and regions, the sector can no longer do with policy apathy. The increased number of farmer suicides highlights the fact that there is something fundamentally wrong with the way agriculture was dealt with, particularly after the economic reform process was rolled out. If we examine the immediate reason for distress that leads farmers to commit suicide, it is clearly that of indebtedness. Naturally most of the significant policy measures that were taken by the state in the recent past are aimed at the issue of supply of credit, the cost of credit, and the resultant use of credit in agriculture. In a way, this is an immediate relief measure that was required from the State. This chapter argues that some long term measures need to be taken to ensure that agriculture as a livelihood opportunity becomes attractive to farmers and not a desperate occupation that needs constant doses of State support even for survival.