<div>In the recent weeks, there have been a spate of farmer suicides in the country most probably because of inclement weather and crop failures. In fact, on a single day, according to press reports, recently, there were 9 suicides in Karnataka and more than 150 in last four months. The main reasons for the suicides are financial distress and indebtedness, largely fuelled by erratic monsoons. <br /><br />Traditionally, according to data released by the government, nearly half of farmer suicides are on account of financial distress. Illustratively, in 2014, 2755 of 5650 farmer suicides could be attributed to factors like indebtedness (1163), failure of crops (952), natural calamities (491) and poverty (149).<br /><br />The farmers are in financial distress for various reasons. First and foremost, they lack financial literacy because of which they tend to take loans beyond their repaying capacity. As a number of financial institutions are operating in rural areas, farmers succumb to the opportunities and avail loans from different sources. Quite often, over and above, long term loans from formal institutions, farmers also choose to take short term loans in the hope of a good harvest. <br /><br />In addition, for any social purpose, easy access to loans from money lenders adds to the repayment burden. In many cases, once there is a crop failure due to various reasons, mainly natural, farmers being unaware of alternatives, come under financial distress. The variation in prices especially at the harvesting stage also adds to financial distress. One example can be the case of sugarcane prices in recent weeks. <br /><br />In India, in addition to the traditionally long standing factors and general slowdown of the economy, significant unpredictable climatic changes are taking place due to global warming. Further, the current year could face the brunt of El Nino effect. Therefore, it will be helpful to be well-prepared for a crisis in next few months.<br /><br />As revealed by the data, it is very disturbing that in the fast growing economy like India and the prosperous state of Karnataka which houses the IT hub of the country, farmers have to sacrifice their lives in the face of financial distress, especially indebtedness. Thus, there is an urgent need to address this problem, by building a database on the farmers, using the latest available technology in the country to identify vulnerable farmers who are under financial distress and those getting into a similar situation. Probably, local offices of the Reserve Bank of India and National Bank for Agriculture and Rural Development can help in this exercise. <br /><br />The preparation and maintaining of such a list would necessarily be costly and require application of modern technology, including big data analysis to determine the behaviour of farmers, weather forecasts, satellite mapping of cropping pattern and status of crops on real time basis, and trends in the forward and commodities’ markets. <br /><br />But, the country incurs a substantial pecuniary loss at every death of a farmer in addition to the general loss to the society and therefore, preparation of such a list should be a priority despite the cost. The list would also provide an opportunity to begin providing counselling to the farmer, if need be, to face the rising distress. Finally, like the non-performing assets, there is a need to fix responsibility for every suicide death of the farmer in the country.<br /><br />Historically, the government has been introducing multiple schemes for farmers like Kisan Credit Cards, crop term loans, crop standing loans, and spread of business correspondents of banks to wean the farmers away from private money lenders but not with much success. To mitigate the problems specific to the farmers, the government has also launched the National Agriculture Insurance Scheme (NAIS), a crop insurance scheme. <br /><br />In case of natural problems and disasters, the government generally provides liberal grants and waives-off loans to mitigate economic woes of the farmers. But despite these well-known measures, the distress for the farmers continues and so do the suicides.<br />Social security measures<br /><br />Of late, the government has been initiating wide spread social security measures across the country in terms of banking the unbanked and funding the unfunded. It has also initiated schemes like Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana and Atal Pension Yojana. Thus, the government is providing social and welfare oriented programmes to benefit the masses, including the farmers. <br /><br />The government could consider another scheme - sustainability allowance scheme - for distressed farmers, during critical times like natural and climatic disasters for financially distressed people for a few months or a year until the next cropping season or their income stabilises. This suggested scheme is similar to the ‘unemployment benefits’ offered by governments of many countries across the globe for the unemployed people. <br /><br />Under this scheme, the earning member of the family will get two main benefits - further loan to set up business/initial finance for agriculture and monthly compensation for one year till his next regular income. Therefore, the government could consider payments of additional funds to the farmer during the year in addition to loan waivers and restructuring of loans which does not add any purchasing power to the farmer household. <br /><br />The sustainability allowance scheme not only solves the current problems of not being able to pay the loans, but also gives strength and financial support to the people for recovering from natural disasters and start afresh. The farmer will be able to fulfil all financial needs required for his business, school fees for children, food requirement for family through this income. <br /><br />Thus, they do not have to worry about sustaining their family but live with dignity and pride till the next crop season comes up or income from business is restored and stabilised. Hopefully, this will help solve the suicides problem amongst farmers and rural areas. <br /><br /><em>(Singh is RBI Chair Professor of Economics; Phegade and Sanghavi are PGP students working on social security measures. All are with IIM-Bangalore.)</em></div>
<div>In the recent weeks, there have been a spate of farmer suicides in the country most probably because of inclement weather and crop failures. In fact, on a single day, according to press reports, recently, there were 9 suicides in Karnataka and more than 150 in last four months. The main reasons for the suicides are financial distress and indebtedness, largely fuelled by erratic monsoons. <br /><br />Traditionally, according to data released by the government, nearly half of farmer suicides are on account of financial distress. Illustratively, in 2014, 2755 of 5650 farmer suicides could be attributed to factors like indebtedness (1163), failure of crops (952), natural calamities (491) and poverty (149).<br /><br />The farmers are in financial distress for various reasons. First and foremost, they lack financial literacy because of which they tend to take loans beyond their repaying capacity. As a number of financial institutions are operating in rural areas, farmers succumb to the opportunities and avail loans from different sources. Quite often, over and above, long term loans from formal institutions, farmers also choose to take short term loans in the hope of a good harvest. <br /><br />In addition, for any social purpose, easy access to loans from money lenders adds to the repayment burden. In many cases, once there is a crop failure due to various reasons, mainly natural, farmers being unaware of alternatives, come under financial distress. The variation in prices especially at the harvesting stage also adds to financial distress. One example can be the case of sugarcane prices in recent weeks. <br /><br />In India, in addition to the traditionally long standing factors and general slowdown of the economy, significant unpredictable climatic changes are taking place due to global warming. Further, the current year could face the brunt of El Nino effect. Therefore, it will be helpful to be well-prepared for a crisis in next few months.<br /><br />As revealed by the data, it is very disturbing that in the fast growing economy like India and the prosperous state of Karnataka which houses the IT hub of the country, farmers have to sacrifice their lives in the face of financial distress, especially indebtedness. Thus, there is an urgent need to address this problem, by building a database on the farmers, using the latest available technology in the country to identify vulnerable farmers who are under financial distress and those getting into a similar situation. Probably, local offices of the Reserve Bank of India and National Bank for Agriculture and Rural Development can help in this exercise. <br /><br />The preparation and maintaining of such a list would necessarily be costly and require application of modern technology, including big data analysis to determine the behaviour of farmers, weather forecasts, satellite mapping of cropping pattern and status of crops on real time basis, and trends in the forward and commodities’ markets. <br /><br />But, the country incurs a substantial pecuniary loss at every death of a farmer in addition to the general loss to the society and therefore, preparation of such a list should be a priority despite the cost. The list would also provide an opportunity to begin providing counselling to the farmer, if need be, to face the rising distress. Finally, like the non-performing assets, there is a need to fix responsibility for every suicide death of the farmer in the country.<br /><br />Historically, the government has been introducing multiple schemes for farmers like Kisan Credit Cards, crop term loans, crop standing loans, and spread of business correspondents of banks to wean the farmers away from private money lenders but not with much success. To mitigate the problems specific to the farmers, the government has also launched the National Agriculture Insurance Scheme (NAIS), a crop insurance scheme. <br /><br />In case of natural problems and disasters, the government generally provides liberal grants and waives-off loans to mitigate economic woes of the farmers. But despite these well-known measures, the distress for the farmers continues and so do the suicides.<br />Social security measures<br /><br />Of late, the government has been initiating wide spread social security measures across the country in terms of banking the unbanked and funding the unfunded. It has also initiated schemes like Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana and Atal Pension Yojana. Thus, the government is providing social and welfare oriented programmes to benefit the masses, including the farmers. <br /><br />The government could consider another scheme - sustainability allowance scheme - for distressed farmers, during critical times like natural and climatic disasters for financially distressed people for a few months or a year until the next cropping season or their income stabilises. This suggested scheme is similar to the ‘unemployment benefits’ offered by governments of many countries across the globe for the unemployed people. <br /><br />Under this scheme, the earning member of the family will get two main benefits - further loan to set up business/initial finance for agriculture and monthly compensation for one year till his next regular income. Therefore, the government could consider payments of additional funds to the farmer during the year in addition to loan waivers and restructuring of loans which does not add any purchasing power to the farmer household. <br /><br />The sustainability allowance scheme not only solves the current problems of not being able to pay the loans, but also gives strength and financial support to the people for recovering from natural disasters and start afresh. The farmer will be able to fulfil all financial needs required for his business, school fees for children, food requirement for family through this income. <br /><br />Thus, they do not have to worry about sustaining their family but live with dignity and pride till the next crop season comes up or income from business is restored and stabilised. Hopefully, this will help solve the suicides problem amongst farmers and rural areas. <br /><br /><em>(Singh is RBI Chair Professor of Economics; Phegade and Sanghavi are PGP students working on social security measures. All are with IIM-Bangalore.)</em></div>
