ECONOMY
INDEBTEDNESS SURVEY REVEALS TICKING-BOMB SITUATION
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INDEBTEDNESS SURVEY REVEALS TICKING-BOMB SITUATION



Punjab's rural sector deep in debt trap; 1/3rd of marginal farmers under BPL; 86% farmers, 80% labourers in debt 

A Special Report by PT Agriculture Correspondent

CHANDIGARH: About 86% of Punjab's farming families and slightly more than 80% of the state's agriculture labour families are under debt, a new survey of rural indebtedness has revealed.
 
The first-ever survey about farm indebtedness in Punjab that covers agricultural labourers, unlike earlier studies that left out farm labour, has shown that large landholding farmers spend more than six times than marginal farmers and more than 12 times than agricultural labourers on durables, non-durables, services and socio-religious ceremonies.

Shattering the myth about Punjab's prosperous farmers, the survey said 32.60 per cent of marginal farm-size category households in rural Punjab live below the poverty line when seen on the basis of consumption expenditure. While 14.65 percent of small and 6.25 percent of semi-medium farm-size households were also under the BPL, at least 2.27 percent of even medium farm-size households shared the same fate.

Also, while consumption pattern in case of marginal, small, semi-medium and medium farm-size families remains of a subsistence nature, with maximum money being spent on non-durables, farmers owning large tracts of land spent the most on durable items, followed by socio-religious ceremonies, non-durables and services.

Depicting a picture of shocking skew in incomes, expenditure, consumption patterns and on many other counts, the field survey entitled,"Indebtedness Among Farmers and Agricultural Labourers,” is the third such exhaustive study in the domain in Punjab. 

The first two broadspectrum surveys, one by Prof HS Shergill and the second by Dr Sukhpal Singh of Punjab Agricultural University, had not covered the farm labourers demographic. The latest survey, published in a book form by Germany's Lambert Academic Publishing, was released here by a farmer and a farm labourer in the presence of renowned economist, Prof Gian Singh of Punjabi University, Patiala. 
 
Carried out by Dr Gian Singh, Dr Anupama, Dr Rupinder Kaur, Dr Sukhvir Kaur (all from Department of Economics at Punjabi University) and Dr Gurinder Kaur, a professor at the Department of Geography at the same university, the survey underlines that while borrowing is a common phenomenon in the world, Punjab's farmers are singularly "unable to return the amount of debt out of their meagre income."
 
In turn, this "cancerous, self-perpetuating, malignant and maleficent" indebtedness abates agricultural production," affects social psyche, "aggravates inequalities," "arrests social progress and misdirects social efforts," the survey covering the period of 2014-15, said.

Coming at a time when Punjab is in the throes of a robust debate in rural indebtedness and when the political rhetoric over a possible farm debt waiver is up by many decibels, the survey is likely to underline the pitiable state of farm labourers, a section that had been hitherto ignored by many farm economists.
The survey covered 1,007 farm households and 301 agricultural labour households in Mansa, Ludhiana and Hoshiarpur – from Punjab's South-West, Central Plains, and Shivalik Foothills regions, respectively –  also brings out the fact that there are "considerable variations in the levels of poverty among the different farm-size categories and agricultural labourers across (various) regions (of Punjab)."

Also, the survey found that a large majority of farm labourers in Punjab – a shocking 80.07 percent – are living below the poverty line, and attributed it to "lack of employment opportunities and immobility of labour." 

While average annual income of a farmer family is Rs 2.92 lakh – ranging from Rs 12.03 lakh for large farm-size owner farmer's family to Rs 1.39 lakh for marginal farmer's family – an average agriculture labourer's family earns a mere Rs 81,452 in a year, with more than 90 percent of it coming from hiring out labour in agriculture. 

On an average, the survey showed, a farming household in rural Punjab is burdened under a debt of Rs 4.74 lakh (Rs 5.52 lakh on an average if only indebted sampled families are taken into account). An average farm labourer’s household reels under a debt of Rs 54,709, the study brought out.

About 75.27 percent of the farmers' debt is owed to institutional agencies, the remaining 24.73 percent incurred from non-institutional sources, such as commission agents, money-lenders, traders and shopkeepers, large farmers, and relatives and friends. 
An average farm household owes 57 percent of the debt to commercial banks.

The survey also showed that marginal farmers have the highest propensity to consume, and are likely to spend Rs 1,350 for every Rs 1,000 they earn. Small farmers spend Rs 1,290, semi-medium farmers Rs 1,100, medium farmers Rs 1,060 and large farmers Rs 940 against every Rs 1,000 they earn. Thus, farmers owning large tracts of land exceeding 15 acres remain just slightly above water, only underlining the persistent debt-trap like condition in which Punjab's farmers live.

Worse is the state of Punjab's agricultural labourers on this score. While the survey showed that an agricultural labour household consumes Rs 1,120 for ever Rs 1,000 it earns – an average consumption propensity of 1.12 in technical terms – the fact is that labourers actually end up suppressing consumption since loans are hard to come by and they have to struggle to maintain a minimum level of consumption by depending on loans that mostly come from non-institutional sources, tagged with high interest rates.

Thus, while an average farm household incurs an annual deficit of Rs 43,940, and average labourer household sinks under Rs 9,427 worth of annual deficit.

Marginal farmers are defined as those owning up to 2.5 acres of land while small farmers are those owning more than 2.5 acres and up to 5 acres, small-medium farmers more than 5 acres and up to 10 acres, medium farmers more than 10 acres and up to 15 acres and large farmers are those who own more than 15 acres of land. 

In revelations that may play into the ongoing political scenario in the context of cow-related politics, the survey said livestock assets were the "second most important productive asset of the rural household" after durable assets. Clearly, a more proactive cow-buffalo-beef-slaughter-cattle trade-gaubhagat-gaurakshak-gaushala-vigilante kind of politics may end up harming this key pillar of rural economy. Indications are that farmers are already feeling the heat of such trends in politics fanned by saffron brigade.

The latest survey is likely to further fan the debate about farm debt waiver, with Chief Minister Amarinder Singh under massive pressure to announce immediate relief in the ongoing budget session of the state Assembly, particularly in the backdrop of aggressive agitation of farmers in Madhya Pradesh, Maharashtra, Telangana and other regions.

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