Agrarian crisis in Andhra Pradesh
The
extreme agrarian distress in Andhra Pradesh achieved national prominence
when it resulted in the dramatic increase in suicides by farmers in
the region. These have occurred in substantial numbers for around seven
years now, but the causes leading to such desperation have been documented
by some sensitive journalists and local activists in the state relatively
recently.
The
new government in the state - which came to power essentially because
its leaders showed themselves to be aware of the severity of the problems
in the countryside - has therefore made agricultural regeneration the
most important priority. It is becoming increasingly evident that the
difficulties confronting agriculture in Andhra Pradesh are complex and
multifarious, and will in fact require a complete reversal of the earlier
economic strategy followed in the state, if these problems are to be
adequately addressed.
But the past experience in Andhra Pradesh deserves even greater national
attention. This is because what has already happened in very acute form
in this state is occurring in many (even most) other parts of rural
India. Even the same symptoms - farmers' suicides, hunger deaths in
the midst of production surpluses, distress migration under stark conditions
- are exhibiting themselves in regions as disparate as Vidarbha in Maharashtra
and southwestern Rajasthan. The causes, also, are broadly the same,
with the shift towards increasingly unreliable cash crops, the decline
in institutional credit, the problems with input supplies and crop marketing,
and the lack of alternative non-agricultural income opportunities, all
contributing to the generalised agrarian crisis.
Of course, what has happened in rural Andhra Pradesh has been particularly
severe. The state of Andhra Pradesh had become almost a laboratory for
every extreme form of neoliberal economic experiment, with a massive
shift towards relying on incentives for private agents as opposed to
state intervention and regulation of private activity, in virtually
all areas. Ironically, this decline in the state's role took place at
the same time that the state government was incurring massive external
debts from bilateral and multilateral external agencies. Many of the
problems in the economy of the state - in agriculture as well as in
non-agriculture - can be traced to this reduction of the government's
positive role and the collapse of a wide range of public institutions
affecting the conditions facing producers.
Take the problem of farmers' suicides, which are probably the most dramatic
sign of extreme despair and hopelessness, and close to starvation deaths
as the most blatant indicator of the extent of rural devastation. The
proximate cause of such suicides is usually the inability to cope with
the burden of debt, which farmers find themselves unable to repay. In
most (but not all) cases, the debt was contracted to private moneylenders,
as the massive decline in agricultural credit from banks and co-operatives
has reduced access especially of small cultivators to institutional
credit.
But the debt burden itself is only a symptom of the wider malaise. Cultivation
itself has become less and less viable over time, as input prices in
Andhra Pradesh especially have sky-rocketed, and farmers have gone in
for cash crops with uncertain harvests and even more uncertain output
markets. The opening up of agricultural trade has forced farmers to
cope with the vagaries and volatility of international market prices,
even while the most minimal protection earlier afforded to cultivators
has been removed.
Public agricultural extension services have all but disappeared, leaving
farmers to the mercy of private dealers of seed and other inputs such
as fertiliser and pesticides who function without adequate regulation,
creating problems of wrong crop choices, excessively high input prices,
spurious inputs and extortion. Public crop marketing services have also
declined in spread and scope, and marketing margins imposed by private
traders have therefore increased. All this happened over a period when
farmers were actively encouraged to shift to cash crops, away from subsistence
crops which involved less monetised inputs and could ensure at least
consumption survival of peasant households.
The crisis in water and irrigation sources can also be traced to these
cultivation patterns. Over-use of groundwater - once again resulting
from the absence of public regulation or even advice, as well as the
shift to more water-using crops - has caused water tables to fall across
the state. Declining public investment, inadequate maintenance and the
regionally uneven pattern of spending, have all made surface water access
also problematic. In consequence, there are now real problems with respect
to even the current economic viability of farming as a productive activity
in most parts of rural Andhra Pradesh, not to mention its sustainability
over time.
Other factors have added to debt burdens that become unbearable over
time. Production loans dominate in current rural indebtedness. But among
the non-productive loans incurred by rural households, those taken for
paying for medical expenses are the most significant. The deterioration
of public health services and the promotion of private medical care
have dramatically increased the financial costs of sheer physical survival
and well-being, even among the relatively poor.
This entire process is sometimes presented as a situation in which rural
people have been ''left out'' of the process of globalisation, or have
been ''marginalised'' or ''excluded''. But nothing could be further
from the truth. The problem is not at all that cultivators and workers
in this state have been ''left out''; rather, they have been forced
into market relations that are intrinsically loaded against them. They
have not been marginalised and excluded; instead, they have been incorporated
and integrated into market systems in which their lack of assets, poor
protection through regulation and low bargaining power have operated
to make their material conditions more adverse.
Thus, there have been policy errors of both omission and commission.
And these have combined to create the specific problems outlined above,
on which there now exist a wealth of data and a number of useful studies.
But the effects of these errors are apparent even in the aggregate data
on output, even though these are recognised to be notoriously slack
in identifying actual material trends. Chart 1 indicates the behaviour
of the index numbers for per capita income (that is net domestic product
in constant 1993-94 prices) for all sectors and for agriculture alone.
The SDP has been deflated by total population, and the agriculture product
has been deflated by rural population only, to give an idea of the actual
trends over time in rural incomes.
It
is evident that while aggregate SDP per capita has increased moderately
since 1993, SDP in agriculture per capita shows no such increase, and
has actually declined. In fact, between the triennium 1994-94 to 1995-96
and the triennium 2001-02 and 2003-04, per capita agricultural product
actually declined by around 12 per cent.
This has
also been reflected in indicators of per capita consumption, which probably
provide a more accurate picture of the real economic conditions in the
countryside. Chart 2 indicates the trend in the four regions of rural
Andhra Pradesh according to the NSS consumer expenditure surveys.
Aggregate per capita consumption for the rural areas of the whole state
taken together increased marginally between 1983 and 1999-2000. But
it is notable that there appears to have been hardly any increase since
1993-94, despite the moderate increase in per capita SDP indicated above.
What is even more significant is that per capita consumption fell after
1993-94 in all the regions of rural Andhra Pradesh barring the coastal
Andhra region. This fall was particularly marked for Rayalseema (comprising
the Southwest and Inland Southern regions). So, in most of the rural
areas of the state, average consumption expenditure actually declined
in real terms in the period 1993-94 to 1999-2000.
This is quite consistent with the picture of growing difficulty of cultivation
that has been outlined above. But in addition to the agricultural patterns,
the general stagnation of the rural economy, and the absence of non-agricultural
income generation possibilities, contributed further to the deterioration
of living standards in the countryside. Part of the problem in employment
generation stemmed from agriculture itself - not only was this sector
depressed, but the increasing mechanisation implied falling labour use
per hectare of cultivation.
Growing mechanisation of agricultural activity was a phenomenon noticed
across rural India. But in Andhra Pradesh this was actively encouraged
by the state government, which provided subsidies to large farmers attempting
to change cultivation practices to use more mechanised techniques. To
give an idea, the subsidy expenditure incurred by the state government
for farm mechanisation increased from Rs. 250 crores in 2001-02 to as
much as Rs. 933 crores by 2003-04.
Unsurprisingly in this context, agricultural employment stagnated. Table
1 provides evidence on the growth of employment, using work participation
rates (for all workers and for principal and subsidiary activities)
from the NSS and population data from the Census of India. Total agricultural
employment in terms of Usual Status occupation barely increased at all
between 1993-94 and 1999-2000, while in terms of Daily Status (which
as a flow measure is a more accurate indicator of labour demand conditions)
actually declined.
Table
1: Annual rates of growth of rural employment |
||||
per
cent per annum |
Total
Usual Status |
Total
Daily status |
Agri
Usual Status |
Agri
Daily Status |
1983
to 1987-88 |
1.04 |
2.01 |
0.07 |
1.53 |
1987-88
to 1993-94 |
3.15 |
83.73 |
3.66 |
4.39 |
1993-94
to 1999-2000 |
0.06 |
80.03 |
0.55 |
-0.03 |
This
decline in agricultural employment was not countered by any increase
in non-agricultural employment, so that total rural employment effectively
did not increase at all, in a period when rural population was increasing
in Andhra Pradesh was increasing by around 1.4 per cent per year. Andhra
Pradesh shows the lowest rate of rural employment growth (of all types
- that is principal and subsidiary) among all the states of India, at
less than one-tenth of the already low national average of 0.66 per
cent per year over this period.
This too was related to national and state government policies - in
particular, the decline in public expenditure directed towards the rural
areas especially after 1992-93. The positive multiplier effects of public
expenditure in rural India have been widely noted; indeed, it was such
expenditure that was responsible for the diversification of employment
observed across the rural economy in the late 1980s, and the associated
reduction in rural poverty. By contrast, the 1990s were marked by a
concentration of public resources towards urban areas.
This trend was especially marked in Andhra Pradesh, where the urge to
build up a supposedly modern metropolis in Hyderabad and to enhance
certain types of connectivity especially for urban areas, dominated
over the evident need to provide resources even for basic infrastructure
in the villages. Thus, even public investment that directly contributes
towards agricultural growth, whether in the form of road and rail connectivity
or the construction and maintenance of surface irrigation schemes, was
reduced. The pattern of public expenditure therefore contributed in
no small measure to the overall agrarian crisis.
In addition, as has already been noted, certain critical public organisations
that provided direct assistance to farmers were either closed down (such
as the AP Irrigation Development Corporation, which provided assistance
in groundwater exploitation) or greatly debilitated (such as the AP
Seed Corporation).
All this is important in suggesting how the direction of policy must
change in Andhra Pradesh, and the good news is that the state government
already appears to be aware of much of this. But it also serves as a
warning for the whole of India. Indeed, just as Andhra Pradesh provides
a dismal example of the disastrous effects of neoliberal economic policies
upon agriculture, it also may in future point to the alternative policies
that allow for viable and sustainable agriculture to develop in India.