Bundelkhand Farmer Suicides & Failure Of Micro-Economics
Earlier it was Vidarbha, then it was Andhra that shocked the nation with the frequent spate of farmer suicides, right now it’s Bundelkhand that is pricking the conscience of those who have it. For the rest who live in the air-conditioned zone of 8-to-9 per cent economic growth, the plight of the farm workers belongs to another world.
And it’s not just a one-off tragedy that has struck this region of “Ulta Pradesh” that is our Uttar Pradesh where the number of farmer suicides has been soaring unchecked. It’s a continuing march of death and despair over the years. This year in the first five months alone as many as 519 lives have been extinguished and one shudders to think what lies ahead in store for the rest of the year. Last year (2010) the death toll was 583 and the previous year it stood at 568.
A sudden flurry of interest was sparked after the April visit to the region by Rahul Gandhi and Prime Minister Manmohan Singh. Other political leaders were quick to jump on to the bandwagon in berating UP Chief Minister Mayawati for her failure to take remedial measures to stem the tragedy that is afflicting the seven districts of Bundelkhand for the third successive year. Banda district leads with more than half of the region’s toll so far this year, followed by Hamirpur, Jhansi, Lalitpur, Mahoba, Chitrakoot and Jalaun. Of course, in the immediate analysis, it is the failure of Mayawati’s government which has ruled the state for the last four years. But drought and suicides have stalked the region when other political parties have been in power too. It is a failure not just of one party or one style of government, it’s a systemic failure of the politico-bureaucratic and economic establishment which covers all parties.
Droughts caused by nature’s vagaries, and farming without the much-talked about crop insurance leading to debt traps and suicides are a hydra-headed challenge, which needs to be tackled with a multi-pronged strategy. Bankers and economists alone can’t solve the problem. Nor can the political masters by themselves. Babus and the underlings down the ladder can scuttle grand designs if left unchecked. A hydra headed problem needs a hydra headed attack. Broadly a triple syndrome must be recognised and broken.
Denial syndrome: First the bureaucracy, the political class and wizards of finance ministries and planning commissions must not be allowed to deny or understate the severity of the problem. Like the denial of death by malnutrition, farm suicides are routinely attributed by officials on the ground and by their political masters to causes like death by short or long term illness, family and social friction.
There is a massive tendency not to recognise the gravity of the situation and not to own up full responsibility for welfare. Not surprisingly, the Bundelkhand suicide figures quoted above are variously denied or dubbed highly exaggerated by district officials. Even if half the toll is narrowed down to debt-related farm suicides, it is damning enough which needs to be faced squarely. It is a collective problem and we must all face it. Denials and half-denials should have no place in our social democracy.
Economic model solution: There are three broadly practised methods to alleviate the distressed farmers’ plight caused by crop failure and debt burden. First there are the government (state and central) agencies which operate through a long line of bank and development officials who get bogged down in bureaucratic delays, inefficiency and in many cases bribery and false accounting. The cure for this kind of malfunction is to reorient the machinery to deliver help to the farmer at his door just like the village money lender does but without his killer interest rate. Greater vigilance and punishment for the erring officials, which is often in short supply, would go a long way.
The second method is via the open market agencies like private micro credit companies who, as in the case of Andhra, borrow money from banks or the market at about 10 per cent and, because of profit making and overheads, end up charging the farmer a hefty rate of about 30 per cent, leading to debt problems including suicides. Companies like SKS Microfinance jumped into the game thinking they could make good profits because of their so-called private sector efficiency. When the farmer could not pay on time they adopted recovery methods which at least partly led to despair, even suicide. The Andhra government had to step in with Andhra Pradesh Microfinance Ordinance which later became an Act to protect the farmers.
The third route is through self-help groups (SHG) or the Bangladeshi Yunus model grameen outfits which are strictly non-profit operations. Many of them are successfully delivering credit to the farmer at about 15 per cent after borrowing money at 10 per cent. They are able to control their over head charges and other levies within a limit of about five per cent, a burden which the farmer can afford to carry. One such SHG NGO chain that has been delivering the goods for several years in nine districts of Karnataka, according to The Hindu, is the Kshethra Dharmasthala Rural Development Project, Dharmasthala, Dakshin Kannada District, Karnataka.
The finance ministries and development agencies of the state and central governments have to learn from such NGOs and Bangladeshi grameen models of Nobel laureate Muhammad Yunus for doorstep delivery of help at affordable rates. The public-minded corporates could do something similar but not without curbing, if not shedding, the profit margin.
The profit-principle of microfinance corporates is unforgiving in its debt collection drive and very often drives the poor farmer to go to a second or third lender in order to repay the first lender. The corporates by their very principle feel obliged to collect their dues regardless of the farmer’s plight. Non-collection would make their operation unviable and even lead to winding up the show or going bust. The farmer on the other hand gets caught in the vicious circle and ends up contemplating or committing suicide out of a sense of shame and despair.
The government agencies try to help the stricken farmer as per the dotted line with little dollops of aid like offering cheques worth Rs 100 to Rs 500 when he has no bank account or does not even have any bank within a striking distance. Some of the government appointed delivery men are known to have presented cheques worth fifty rupees or even ten rupees as calculated by accounts wizards at branch headquarters. The poor farmer does not know whether to laugh or cry or hang himself!
Often after lots of them have committed suicide, there are calls for loan waivers which sometimes materialise and partly rescue the families of the victims, though too late for the victims themselves. One of the latest calls for loan waivers comes from UP Chief Minister Mayawati, who has suddenly woken up to the plight of Bundelkhand farmers after four years of splurging money on statues of herself and her party’s elephant symbol. Passing the buck to New Delhi, she has asked the Centre to foot the loan waivers bill.
Never mind who foots the bill, the solution lies not in late loan waivers but in crop insurance and timely development work.
By Subhash Chopra