<p>The data about the indebtedness of the country’s agricultural households, provided in the National Statistical Office’s (NSO) latest Situation Assessment Survey, should cause concern as they show that the financial status of most of them is perilous. According to the survey, about 50.2 per cent of agricultural households were in debt at the end of 2019, with an average outstanding of Rs 74,121. Though this is slightly less than the percentage of households in debt in the previous survey in 2013, there was a 57 per cent jump in the average debt. Andhra Pradesh has the highest average outstanding debt of Rs 2.45 lakh, and Karnataka, with Rs 1.26 lakh, is among the 11 states where the average is above Rs 1 lakh. The average income of households increased from Rs 6,426 to Rs 10,218 after the previous survey, but this had no impact on indebtedness, which increased by about 57 per cent from Rs 47,000. </p>.<p>The composition of the income, whose highest share was from wages, also shows how precarious the state of finances of agricultural households is. When the average farmer with a large family earned only Rs 27 per day from cultivation, it was only natural that indebtedness would rise. It is also seen that unskilled manual labour under MGNREGS was more paying than farm work. When farming is not paying, farmers cannot reduce the debt burden and it only rises in most cases. For most, it is subsistence farming, and debts are a part of that economy. The vagaries of the weather and other natural disasters caused by climate change have added another dimension to farmers’ problems. </p>.<p>The NSO data represents the situation that existed before the start of the Covid-19 pandemic. Agriculture was not affected, as other sectors of the economy were, by the lockdown and related problems and it even registered some growth. But it is unlikely that rural households would benefit much from the growth because the return of migrant workers to villages from cities has added to their burden. Households lost the income from the migrant workers and now had to support them, too. Amidst all this, the promise of doubling farmers’ income has been lost altogether. Any increase in farm income would not help if the debt burden is not reduced. Cash transfers of small amounts do not go beyond token support. Writing off the debts would create problems for the banks, and in any case, a one-time waiver will not help if the underlying problem is not addressed. Indebtedness is the biggest single cause of farmer suicides. It needs to be tackled as part of the bigger crisis that agriculture and the rural economy are facing.</p>
<p>The data about the indebtedness of the country’s agricultural households, provided in the National Statistical Office’s (NSO) latest Situation Assessment Survey, should cause concern as they show that the financial status of most of them is perilous. According to the survey, about 50.2 per cent of agricultural households were in debt at the end of 2019, with an average outstanding of Rs 74,121. Though this is slightly less than the percentage of households in debt in the previous survey in 2013, there was a 57 per cent jump in the average debt. Andhra Pradesh has the highest average outstanding debt of Rs 2.45 lakh, and Karnataka, with Rs 1.26 lakh, is among the 11 states where the average is above Rs 1 lakh. The average income of households increased from Rs 6,426 to Rs 10,218 after the previous survey, but this had no impact on indebtedness, which increased by about 57 per cent from Rs 47,000. </p>.<p>The composition of the income, whose highest share was from wages, also shows how precarious the state of finances of agricultural households is. When the average farmer with a large family earned only Rs 27 per day from cultivation, it was only natural that indebtedness would rise. It is also seen that unskilled manual labour under MGNREGS was more paying than farm work. When farming is not paying, farmers cannot reduce the debt burden and it only rises in most cases. For most, it is subsistence farming, and debts are a part of that economy. The vagaries of the weather and other natural disasters caused by climate change have added another dimension to farmers’ problems. </p>.<p>The NSO data represents the situation that existed before the start of the Covid-19 pandemic. Agriculture was not affected, as other sectors of the economy were, by the lockdown and related problems and it even registered some growth. But it is unlikely that rural households would benefit much from the growth because the return of migrant workers to villages from cities has added to their burden. Households lost the income from the migrant workers and now had to support them, too. Amidst all this, the promise of doubling farmers’ income has been lost altogether. Any increase in farm income would not help if the debt burden is not reduced. Cash transfers of small amounts do not go beyond token support. Writing off the debts would create problems for the banks, and in any case, a one-time waiver will not help if the underlying problem is not addressed. Indebtedness is the biggest single cause of farmer suicides. It needs to be tackled as part of the bigger crisis that agriculture and the rural economy are facing.</p>