The Bengal Famine: How the British engineered the worst genocide in human history for profit

The Bengal Famine: How the British engineered the worst genocide in human history for profit

Rakhi Chakraborty | August 15, 2014 at 7:30 am


“I hate Indians. They are a beastly people with a beastly religion. The famine was their own fault for breeding like rabbits.”

                                                                                                                                                                                                                    -Winston Churchill

The British had a ruthless economic agenda when it came to operating in India and that did not include empathy for native citizens. Under the British Raj, India suffered countless famines. But the worst hit was Bengal. The first of these was in 1770, followed by severe ones in 1783, 1866, 1873, 1892, 1897 and lastly 1943-44. Previously, when famines had hit the country, indigenous rulers were quick with useful responses to avert major disasters. After the advent of the British, most of the famines were a consequence of monsoonal delays along with the exploitation of the country’s natural resources by the British for their own financial gain. Yet they did little to acknowledge the havoc these actions wrought. If anything, they were irritated at the inconveniences in taxing the famines brought about.

Image source

The first of these famines was in 1770 and was ghastly brutal. The first signs indicating the coming of such a huge famine manifested in 1769 and the famine itself went on till 1773. It killed approximately 10 million people, millions more than the Jews incarcerated during the Second World War. It wiped out one third the population of Bengal. John Fiske, in his book “The Unseen World”, wrote that the famine of 1770 in Bengal was far deadlier than the Black Plague that terrorized Europe in the fourteenth century. Under the Mughal rule, peasants were required to pay a tribute of 10-15 per cent of their cash harvest. This ensured a comfortable treasury for the rulers and a wide net of safety for the peasants in case the weather did not hold for future harvests. In 1765 the Treaty of Allahabad was signed and East India Company took over the task of collecting the tributes from the then Mughal emperor Shah Alam II. Overnight the tributes, the British insisted on calling them tributes and not taxes for reasons of suppressing rebellion, increased to 50 percent. The peasants were not even aware that the money had changed hands. They paid, still believing that it went to the Emperor.

Image source

Partial failure of crop was quite a regular occurrence in the Indian peasant’s life. That is why the surplus stock, which remained after paying the tributes, was so important to their livelihood. But with the increased taxation, this surplus deteriorated rapidly. When partial failure of crops came in 1768, this safety net was no longer in place. The rains of 1769 were dismal and herein the first signs of the terrible draught began to appear. The famine occurred mainly in the modern states of West Bengal and Bihar but also hit Orissa, Jharkhand and Bangladesh. Bengal was, of course, the worst hit. Among the worst affected areas were Birbum and Murshidabad in Bengal. Thousands depopulated the area in hopes of finding sustenance elsewhere, only to die of starvation later on. Those who stayed on perished nonetheless. Huge acres of farmland were abandoned. Wilderness started to thrive here, resulting in deep and inhabitable jungle areas. Tirhut, Champaran and Bettiah in Bihar were similarly affected in Bihar.

Prior to this, whenever the possibility of a famine had emerged, the Indian rulers would waive their taxes and see compensatory measures, such as irrigation, instituted to provide as much relief as possible to the stricken farmers. The colonial rulers continued to ignore any warnings that came their way regarding the famine, although starvation had set in from early 1770. Then the deaths started in 1771. That year, the company raised the land tax to 60 per cent in order to recompense themselves for the lost lives of so many peasants. Fewer peasants resulted in less crops that in turn meant less revenue. Hence the ones who did not yet succumb to the famine had to pay double the tax so as to ensure that the British treasury did not suffer any losses during this travesty.

After taking over from the Mughal rulers, the British had issued widespread orders for cash crops to be cultivated. These were intended to be exported. Thus farmers who were used to growing paddy and vegetables were now being forced to cultivate indigo, poppy and other such items that yielded a high market value for them but could be of no relief to a population starved of food. There was no backup of edible crops in case of a famine. The natural causes that had contributed to the draught were commonplace. It was the single minded motive for profit that wrought about the devastating consequences. No relief measure was provided for those affected. Rather, as mentioned above, taxation was increased to make up for any shortfall in revenue. What is more ironic is that the East India Company generated a profited higher in 1771 than they did in 1768.


Image source

Although the starved populace of Bengal did not know it yet, this was just the first of the umpteen famines, caused solely by the motive for profit, that was to slash across the country side. Although all these massacres were deadly in their own right, the deadliest one to occur after 1771 was in 1943 when three million people died and others resorted to eating grass and human flesh in order to survive.

Image source

Winston Churchill, the hallowed British War prime minister who saved Europe from a monster like Hitler was disturbingly callous about the roaring famine that was swallowing Bengal’s population. He casually diverted the supplies of medical aid and food that was being dispatched to the starving victims to the already well supplied soldiers of Europe. When entreated upon he said, “Famine or no famine, Indians will breed like rabbits.” The Delhi Government sent a telegram painting to him a picture of the horrible devastation and the number of people who had died. His only response was, “Then why hasn’t Gandhi died yet?”

Winston Churchill: Image Source






Image source



This Independence Day it is worthwhile to remember that the riches of the west were built on the graves of the East. While we honour the brave freedom fighters (as we should), it is victims like these, the ones sacrificed without a moment’s thought, who paid the ultimate price. Shed a tear in their memory and strive to make the most of this hard won independence that we take for granted today. Pledge to stand up those whose voice the world refuses to hear because they are too lowly to matter. To be free is a great privilege. But as a great superhero once said, “With great freedom comes great responsibility.”


Rakhi Chakraborty

Writer at YourStory. Student of human rights. Thrives on stories, ideas and innovation

Farmer’s crisis, Our crisis

I look at the food on my plate
and think of those who grew it
With the few rupees I spent
I trust I paid  those
who put the effort
and those whose land it was.

What I pay is meagre
and it does not reach
whose produce reaches me
For their children remain hungry,
those who empower me.

And if I go to a good restaurant
I pay hundreds, even thousands
of rupees more
none of which is even meant
for those who grew the main course
while those who wait
and those who manage
and those who count
keep the bill
and the tip.

When I buy a good cotton t-shirt
I pay hundreds, even thousands more
some for the person
who thought of the great slogan
a lot for the logo of the company
that  made ’em
and the shop that displayed ’em
but for the cotton that the farmers grew
what they must have got, does it need
even ten fingers to count?

Its not that their children
get to wear the cotton
whether woven by hand or the mill
for they are deep in crisis
those who grew the clothes
that define me.

And it is not that I don’t spend,
I splurge at the mall
where I shop,
I have caterers and cuisine
from several countries
for no one should
go without great food
and a grand dessert
at the parties I throw –
except for the farmer
and those who
labored on the fields.

Isn’t it strange
that it is easier
for their products to
reach me
than for my money to reach them
and yet we need to find a way
so that it isn’t they who pay.

–Ravi Kuchimanchi

బతుకు బేరంపై దర్యాప్తు: గుంటూరు రైతుల కిడ్నీ అమ్మకాల పై దర్యాప్తు. రాష్ట్ర మానవ హక్కుల కమిషన్ లో ఫిర్యాదు…


గుంటూరు, మాచర్ల, ఫిబ్రవరి 14: గుంటూరు జిల్లాలో అప్పులపాలైన రైతులు కిడ్నీలు అమ్ముకుంటున్న వైనంపై రాష్ట్రప్రభుత్వం దర్యాప్తునకు ఆదేశించిం ది. ‘ఆంధ్రజ్యోతి’ ప్రధానసంచికలో ‘బతుకే బే రం’ శీర్షికన ప్రచురితమన ప్రత్యేక కథనం సర్కారులో కదలిక తెచ్చింది. దీనిపై కలెక్టర్ సురేష్‌కుమార్, రూరల్ ఎస్పీ సత్యనారాయణ దర్యాప్తునకు ఆదేశించారు. హైదరాబాద్ నుంచి సీఎం పేషీ ఆరాతీసింది. కలెక్టర్ ఆదేశాల మేరకు డీఎంహెచ్‌వో గో
పీనాయక్ శుక్రవారం రెంటచింతలలో ఇంటింటికీ తిరిగి వైద్య పరీక్షలు చేస్తున్నారు. గురజాల ప్రభుత్వాస్పత్రి బృందం కూడా రెంటచింతల చేరింది. స్పందించిన మానవ హక్కుల కమిషన్
హైదరాబాద్: గుంటూరు జిల్లాలో రైతుల కిడ్నీ అమ్మకాలపై రాష్ట్ర మానవహక్కుల కమిషన్ స్పందించింది. ‘ఆంధ్రజ్యోతి’లో వచ్చిన కథనాన్ని సోమరాజు అనే న్యాయవాది హెచ్చార్సీ దృష్టికి తీసుకెళ్లారు. దీనిపై స్పందించిన హెచ్చార్సీ చైర్మన్ నిస్సార్ అహ్మద్ కక్రూ ఏప్రిల్ 2లోగా నివేదిక ఇవ్వాలని గుంటూరు రూరల్ ఎస్పీకి ఆదేశాలు ఇచ్చారు.

సాగుకు చేసిన అప్పు తీర్చేందుకే..
కలెక్టర్, రూరల్ ఎస్పీల ఆదేశాలతో రెవెన్యూ, పోలీసు అధికారులు వేర్వేరుగా విచారణ చేపట్టారు. బాధితుడు మారెబోయిన అప్పారావు నుంచి వివరాలు సేకరించారు. రెండేళ్లు చేసిన సాగు తనను అప్పులపాలు చేసిందని అప్పారావు ఆవేదన చెందాడు. మొదటి సంవత్సరం ఐదెకరాలు, రెండో సంవత్సరం నాలుగెకరాల పొలం కౌలుకు తీసుకొని సాగు చేసి రూ.9 లక్షలు అప్పులపాలయ్యానన్నారు. అప్పు తీర్చే పరిస్థితి లేక ఆత్మహత్య చేసుకోవాలనిపించి.. భార్య గుర్తుకొచ్చి ఆగిపోయానని చెప్పారు.

మాచర్ల వెళ్లినప్పుడు అక్కడ శ్రీను అనే దళారి చెప్పడంతో.. అతడి మాటలు నమ్మి కిడ్నీ అమ్మేందుకు హైదరాబాద్ వెళ్లానన్నారు. ప్రకాశం జిల్లాకు చెందిన ఓ వృద్ధుడికి తన కిడ్నీ ఇచ్చేందుకు రూ. 4.55 లక్షలకు బేరం కుదిరిందని, కానీ, మొత్తమ్మీద తనకు ముట్టినది రూ. 2.65 లక్షలేనని, మిగిలినది దళారి శ్రీను తీసుకున్నాడని వాపోయారు. కిడ్నీ అమ్మినా అప్పులు తీరకపోవడంతో.. పేరు మార్చుకుని మాచర్లలో ఉంటున్నట్లు తహసిల్దారుకు ఆయన తెలిపారు. కిడ్నీ ఇచ్చేందుకు జరిగిన రాతపత్రాలను బాధితుడి నుంచి పోలీసులు తీసుకున్నారు.


-9% growth suggests agrarian crisis: experts

If experts and policy makers are to be believed, the dip in agricultural growth from 18.8% in 2010-11 to -9% in 2011-12 — as reflected in the economic survey — could be symptomatic of an ongoing agrarian crisis in the state. Picture this. The production of cereals, pulses, oil seeds, cotton and almost all produce in the food basket dipped in 2011-12, the fall ranging from 6 to 24%. The state produced 96.62 lakh metric tonnes of cereals as against our requirement of 132.06 lakh metric tonnes.

Dr Ajay Dandekar, agrarian economist, Central University, Gandhinagar, said: “This kind of decline is not one-off. It is reflective of an ongoing agrarian crisis across the country. It will have its implications on food security in the future.”

Lack of support from the government and no ownership for agriculture has made farming increasingly unviable, he said. More than 6,000 cotton farmers in Vidarbha have committed suicides because of debts. The suicides continue unabated despite compensation packages to the tune of Rs8,000 crore in the last six years.

The high cost of production in comparison to the returns is the prime reason behind the phenomenon. “The contribution of agriculture to state income was 15-18% five years ago. Now, it is just 12-13%. It is a telling sign of decline. Increase in farmers’ income is important for the growth of agriculture  sector,” said Wardha-based agrarian expert Vijay Janwadia.

Steps by the state government such as improving dry land irrigation, market intervention for sale of produce, better credit facilities, control over price fluctuations and more subsidies could help increase farmers’ income, feel experts.

Critics, however, feel that sincere efforts by the government are unlikely. “In the last one year, the state has failed to provide fertiliser subsidies on time.

They have promised compensation, but have not handed it out and have banned exports when prices were good in the global market. The regressive policies of the state and central governments are to be blamed for the decline,” said Raju Shetti, MP and farmers’ leader.

62% farmers cannot meet educational needs: Survey by Punjab Farmers Commission, TNN | Feb 27, 2012, 02.22AM IST

CHANDIGARH: A recent survey on government’s plan to shift small and marginal farmers away from unprofitable agriculture and engage them in economically viable activities, has found the government initiatives lacking in preparing the farmers undertake the transition.

The survey conducted in 50 villages by Punjab Farmers Commission has revealed that 62% of Punjab farmers holding land up to 10 acres do not earn enough to take care of their educational needs.

The survey has revealed that the dropout rate among the farmers’ children is so high that only 0.4% of students reach the post graduation level and only 5% get technical education. Also, only 73% of posts of teachers are filled in rural areas.

The rural schools are facing an economic exclusion – majority of these students being from scheduled castes. Farmers of upper strata of villages are sending their children to private schools, which however do not have qualified and sufficient staff.

The survey found that in a test conducted in 147 government and 174 private schools on the syllabus of class V and VI syllabus, only 16% students of mathematics and 31% of science in the government school could answer questions. The same ratio in private schools was 3% and 8% respectively. And 12% and 16% of mathematics and science students respectively in government schools could not offer a single answer. In private schools, 21% students just could not offer any reply about questions on mathematics.

The study has suggested that a separate cadre of rural teachers should be created and that a teacher should work for 10 years in rural areas before being transferred to urban areas. For ensuring attendance of teachers, biometric and SMS-based attendance should be introduced, it said.

The tragedy of the potato farmer

Why have potato and chilly farmers been dumping their stocks on the streets in protest? Biju Negi reports on the market engineering that is looting the poor farmer

Potato farmers in Punjab

In early-January there were reports of potato farmers in Punjab throwing their produce onto the streets. This was because, despite a bumper harvest, farmers were not getting an appropriate or adequate price for their crop. The market was, in fact, offering them far less even than the cost of growing the potatoes. Input costs worked out to around Rs 5 per kg, said the farmers; they were being offered Re 0.50-1 per kg.

There was another report, this time from Guntur in Andhra Pradesh, that angry chilli farmers were getting Rs 2,000/qtl less that year for their common chilli varieties. In 2010, they were being offered Rs 7,000/qtl; this year the maximum they were being given was Rs 5,000/qtl.

These are not new or isolated stories. They happen with fair regularity, every harvest time. This time it was potatoes and chillies. Other times it has been tomatoes, onions, sugarcane…

All these stories have a common link — the market. The reports from Punjab also talked about farmers complaining that there were not enough cold storage facilities where they could have preserved their harvest in the hope of better times ahead.

The tragedy of the Punjab and Guntur farmers (indeed, of farmers all across the country) raises several basic questions and concerns that relate not just to the farmers individually but to the larger picture of agriculture infrastructure and the marginalisation of farmers in India.

December 2011 saw strong nationwide protests over the UPA government’s proposed decision to allow 51% FDI in retail. As a result, the government had to retract (‘keep in abeyance’ may be a better term) its proposal.

Among the major concerns raised in that protest was how majority FDI would harm farmers. Barely any attention was paid to the plight of Punjab’s potato farmers or the chilly farmers of Guntur, by political parties, the media, civil society or retail traders.

Although the FDI issue definitely needed to be protested, we must sift the chaff from the grain and accept that political parties and retail trader associations are shooting from the farmers’ shoulders. Swadeshi trade or local traders are not the holiest of the holy, and their concern was not for the farmer but for themselves as became particularly obvious in this most recent tragedy of the potato farmers. Despite the fact that the desperate farmers were forced to sell their potatoes at Re 1 a kg, consumers in Dehra Dun (and I am sure everywhere else) are buying potatoes at the minimum rate of Rs 7-8 per kg.

The lopsided equation between farmers and traders — yes, the swadeshi trader — is old, well-known, unjust, and tragic. But it continues to this day. Nowhere do we hear of trader associations or organisations suffering a guilty conscience over it; nor do we see the government and political parties overly worried and ready to take concrete steps to rectify the inequity.

Then there is the other question of limited cold storage facilities.

Although a serious concern, the problem is not that there is a shortage of cold storage facilities but why or how it has become essential to have cold storage in the first place.

Cold storage facilities are primarily trading facilities that emerged from the Green Revolution and the concept of corporate agriculture. It is symptomatic of the market’s dominance over agriculture and over farmers. Cold storage is a reflection and consequence of the government’s subservient mentality towards national/international agro chemical companies and their philosophy of globalisation and the free market. Thus, government policies and programmes parrot “production, production, production”, unmindful of the question as to whether so much production is actually necessary, or even whether the farmer and the community have the capacity to absorb and distribute the produce or not. According to the government, the farmer is no longer expected to produce for self and community but for the entire country, even other countries.

Cold storage facilities do not belong to the farmer, certainly not to the small subsistence farmer. These are owned by governments, big companies or big traders dealing in agro produce. And so, just as was stated in the FDI protest, it is argued that cold storage facilities are for the benefit of farmers, and that farmersneed them. The truth is that cold storage is not used by farmers as much as it is by marketers who take advantage of the helpless farmer by buying produce at throwaway prices during a bumper harvest and stocking or hoarding it. Cold storage is systemic to market machinations that played a key role in the global food crisis of 2008, leading ultimately to the present ongoing global economic crisis.

And so it is that the owners of cold storage facilities, agro chemical national and transnational corporations, and their “obedient masters” — governments — have only one mantra that they utter ad infinitum: “increase production, increase production, increase production”. But increasing production has not helped stave off hunger; it has not brought down costs for the consumer; it has not made the farmers’ lives any easier. On the contrary. But yes, raising production certainly benefits the market. By increasing production the small farmer is looted and the consumer too is taken for an easy ride.

Take the case of the chilli farmers of Guntur. In 2010, farmers got Rs 7,000 per qtl for the common chilly variety (one farmer in Khamam commanded Rs 10,300/qtl for his special Badiga variety!). As a result, chilli acreage in the district went up from 65,000 ha in 2010 to 88,000 ha in 2011. That’s when the market moved in for the kill! Cash crop, or corporate agriculture, is nothing but market engineering!

The same story is repeated every time. The caucus of agro chemical companies, agro traders, agro research institutions and governments engineer a situation to incite or lure farmers into growing certain cash crops, fruits or vegetables. Then when the farmers are successfully lured, the caucus ditches them by the wayside.

Farmers fall into this trap every time, in the hope of making quick money. They move from one mono crop to another, from one dream to another, to a nightmare, because they have been manoeuvred not to think or take decisions for themselves. They are cajoled and cheated into giving up their local and traditional forms of holistic agriculture.

What else can the desperate, trapped farmers do? Although we may still refer to farmers as ‘annadata’, in reality they are treated as though they belong to the lowest rung of society. Farmers no longer enjoy rights over farming and decision-making. That is increasingly the prerogative of the market and its ‘pushers’ in government. They are the ones telling the farmer to ‘grow more potatoes’, ‘grow more tomatoes’. And the farmers oblige.

This season, agro traders, cold storage owners (not forgetting, the potato chip makers) would have bought tonnes and tonnes of potatoes at Re 1 per kg, if not less. As a result, potato acreage in Punjab next year is likely to decrease. Which is when the marketers, under the pretext of low production, will make a killing off the consumer. If the price of potatoes next year, at this time, is high, it won’t be the farmers who will benefit or get a remunerative price; the market will simply offload this year’s stocks being held in cold storage!

As long as the market continues to dominate agriculture, the plight of the farmer will remain a sorry one. That is the principle and logic of the market.

(Biju Negi is a writer, sustainable agriculture consultant and member of Beej Bachao Andolan)

Gluts abound as farmers go crop-hopping

Sreelatha Menon & Sanjeeb Mukherjee / New Delhi January 03, 2012, 0:12 IST

Desperate to make money in an increasingly unviable industry, farmers have begun allowing crop prices, yields and margins to solely dictate growing patterns.

If wild weeds were to fetch Rs 6,000 per quintal this year, farmers would instantly abandon all other crops to grow weed next year. Then, if weed prices were to fall the following year, farmers would undoubtedly go bankrupt and look for the next big thing.

This has been the ‘hit and run’ story in Indian agriculture, where instead of adopting stable, multi-cropping strategies, farmers have begun putting all their eggs in one crop basket and are going for broke in the hopes of making windfall profits. Invariably, those dreams come down to earth pretty quickly.


So widespread is this phenomenon today, that India has begun demonstrating massive gluts in food crops in the last four or five years—not seen in agriculture in recent memory. This year alone, the country has experienced a seven per cent surplus of potatoes, a 15.3 per cent of basmati, an eight per cent surplus in cotton as well as in soybean, ginger and even turmeric. In other words, potato farmers decided to plant an extra three million hectares of the tuber. Cotton farmers opted for an extra million hectares this year, while paddy farmers abandoned non-basmati for basmati with acreage of the latter going up by 15 per cent this year.

Seeds of trouble
One of the biggest culprits for acreage increases has been a much greater proliferation of seeds than ever before. This year, Andhra Pradesh gave licenses to seed companies for sale of 96 lakh sachets of BT cotton seeds, which is equivalent to cotton grown on 50 lakh acres. (The previous year licenses were given only for half that quantity and cotton came up on 25 lakh acres.) The seed companies made a killing as prices had also increased.

For those growing BT cotton, losses were large as this strain of cotton requires a lot of water and therefore not appropriate for the dry areas in Andhra Pradesh and Vidarbha, Maharashtra which grows it. The drought meant certain failure for the crop, says Kishore Tiwari of the Vidarbha Janandolan Samiti.

In fact, availability of hybrid seeds has also become a key determinant of what crop farmers decide to grow, says GV Ramanjaneyalu, agricultural scientist and executive director of the agricultural advocacy body Centre for Sustainable Agriculture. Hybrid seeds generally give more yield—and it is this focus on yield and return on investment that have farmers crop-hopping away. This focus on return on investment and yield in order to maximise profits has meant that farmers have stopped multi-cropping—a vital strategy that helped nourish the soil but also worked as risk mitigation in case a particular crop failed, or its prices crashed that year. For instance, edible oil seeds like safflower, sesame, and pulses that were traditionally grown in AP are no longer grown. Similarly, maize grown on barely a lakh of acres in 2002 in Andhra, now grows on 15 lakh acres thanks to a hybrid seed. The rest of the space goes to paddy, grown on 47 lakh acres, and groundnut on 12 lakh acres.

“The states do have control on the quantity and price of seeds sold by companies. If they use it to ensure a balanced distribution of crops in the state, this kind of mono cropping would not happen”, says Ramanjaneyalu, adding that this control also may soon be history as the Seed Bill now in Parliament looks to remove it from state hands.

Government: sort out pricing
Another key reason why states are responsible for farmers herding after a single crop is the pricing policy. If paddy prices are increased by the government, people would sow paddy as much as they sow cotton, says Ramanjenayulu who adds that “government policies are driving farmers en masse to a certain crop and to their own destruction”. Agrees Vijay Jhawandhia of the Vidarbha Shetkari Sanghatna: “The only way to make farmers diversify sowing is to ensure remunerative prices for 10 major crops, including pulses, oil seeds, millets and cereals,’’ he says.

Now, while the government allows the sale of seeds in such numbers, it does nothing to help farmers deal with the large output especially when prices are low. The Cotton Corporation of India procures cotton for Rs 3,300 per quintal (compared to Rs 6,600 a quintal last year) which is less than even the manufacturing cost, says Jhawandia. The Centre never allowed exports when the prices were at their peak last year, say farmer organisations like Bharat Krishak Samaj and Centre for Sustainable Agriculture. But the same government made 17 policy interventions in cotton to protect consumers and industry last year, they point out bitterly.

The story is the same across various commodities. Silk growers are facing a glut after the government decided to reduce the import duty on silk from 30 to six per cent this year. Now the Indian silk has to compete with cheaper imported silk. Basmati rice, soybean, ginger, and turmeric have seen global prices plummet this year coupled with domestic over-production. In the case of turmeric it’s been a virtual freefall: from Rs 18,000 per quintal last year to Rs 4,000 per quintal this year; ginger farmers in Kerala met with a similar fate as prices went from Rs 3,000 a quintal last year to Rs 500 this year. The ginger produced this year in Kerala is enough for the whole country, says Ramanjaneyulu.

“Why would dry un-irrigated Vidarbha go for cotton that needs so much water? This is because the crops that are suited for Vidarbha like jowar don’t get any support price. So, the farmer goes after what gets an attractive price, even if it means high input costs and high market uncertainties,’’ says Jawandhia, underscoring the basic logic underlying why farmers jump crop with such regularity.

“Farmers can’t be blamed. They get motivated to sow a particular crop when it gets a good price. The farmer is merely chasing the assurance of a good price,” adds Jawandhia who is himself coming to terms with a bad crop of soybean coupled with poor prices it was fetching.

A Haque, former chairman Committee of Agricultural Costs and Prices says that the only way such a crisis can be avoided is to provide an inter-crop price parity. As for the glut of perishables like potatoes, he says that an assured marketing mechanism can sort this out. Such a mechanism—where an organisation can engage in large-scale procurement of an excess crop to be stored and sold later—does exist with Nafed (National Agricultural Cooperative Market Federation). Says Haque: “Nafed has the mechanism but it has no system of intervention. In any case the Agriculture Ministry keeps it starved of funds.’’

The law doesn’t help
Apart from such errors, a glaring hindrance to farmers of perishables is the law itself.

Ajay Jakhar, the farmer-cum-activist director of the Bharatiya Krishak Samaj feels that fruits and vegetables must be removed from the commodities covered by the APMC (Agriculture Producers Marketing Committee) Act to end the crisis of perishables. (APMC Act in some states mandates that farm products produced in a state must be sold in designated markets and to licensed traders, thus curbing the freedom of farmers to sell to outsiders and corporates). “This would enable traders from outside the states to buy and farmers would not be forced to sell to local traders all the time,’’ says Jakhar.

“The states today earn about Rs 700 crore in taxes from these commodities that is seven per cent of the material sold in markets. If the Centre were to compensate states for excluding perishables from the APMC Act, the state of farmers would automatically improve,’’ he adds. Now, farmers would be able to sell to anyone in the country.

As for prices plummeting, Jakhar feels that the government intervenes when prices go up, but remains a mute spectator when they go down. In fact, last year when cotton prices went up, the government made policy interventions 17 times in a year, observes Jakhar. But now, it is silent.

The least that can be done is to have real time intelligence on commodities and their output and prices, he says, echoing what most other industry hands feel as well. The government has no clue as to how much tomatoes or onions or ginger is grown in the country. Unless market data collection is maintained, no solutions can be possible, say activists.

The farmers are usually unable to keep their produce for long as they have to sell to pay off their bills and they seldom have any credit. government can easily provide credit against produce and thus protect farmers from money lenders and from getting into commitments with commission agents who double up as money lenders, says Jakhar.

Global comparisons with China show how the latter went for extensive agrarian reforms for nearly 12 years before looking at industrial expansion. We are going in the reverse direction, says Ashok Gulati chairman of the Commission for Agricultural Costs and Prices (CACP).

Round Table with MPs on Farmers Suicides and Agrarian Crisis

ASHA has organised a Round Table on ‘Farmers Suicides and Agrarian Crisis’ at Constitutional Club on 24th November, 2011.

The Hon’ble Members of Parliament present were

D Raja-CPI, Shivanand Tiwari-JDU, Bhartruhari Mahtab-BJD, Prakash Javadekar-BJP, M B Rajesh-CPM, Dr. T.N. Seema-CPM, Dr. Mysoora Reddy-TDP, Capt Jainarain Nishad-JDU, Hukumdeo Narayan Yadav-BJP

Harsh Mandir, Member of NAC

Other prominent people present were Dr. Dinesh Abrol, Dr. Anuradha Prasad from All India Peoples Science Forum, Dr. Vijoo Krishnan, All India Kisan Sabha

in all 30 people participated and the discussion were focused on the existing crisis in Farming sector and how that can be addressed.

Price Compensation system for cultivators
Presentation made during the Round Table

Photographs of the Round Table

The mystery of the boom in farm credit

The spurt in farm credit by commercial banks, including regional rural banks, has interestingly not led to any let-up in distress in the agrarian economy—a mystery that continues to baffle academics, policy planners and, more recently, bankers

Capital Calculus | Anil Padmanabhan

Last week, a clutch of bankers and policy wonks gathered in Bangalore to review recent trends in farm credit. On the face of it, credit to the farm sector is on an unprecedented spiral and, hence, logically should not be cause for worry.

That is precisely the point. The conclave was convened to attempt a candid review of some disconcerting trends in farm credit, which could potentially point to something sinister.

They had reason to do so. The spurt in farm credit by commercial banks, including regional rural banks, has interestingly not led to any let-up in distress in the agrarian economy—a mystery that continues to baffle academics, policy planners and, more recently, bankers. Especially, given the quantum of credit that has been extended and the fact that these loans were made available at an interest rate of less than around 7%—most state governments provide a reduction over and above the priority sector lending rate.


File photo of a rural bank

File photo of a rural bank

Four broad and interlinked trends, made available by some inspiring research undertaken by R. Ramakumar, Pallavi Chavan and Nirupam Mehrotra on farm credit, provide clear pointers that assist us in understanding these apprehensions, if not proving them.

First, there has been a stunning growth in farm credit, especially since the Congress-led United Progressive Alliance (UPA) was voted into power. While in general there was an increase in farm credit, there was a clear spike after 2004—after the UPA promised to double credit outflow in the next three years—growing by 44% each in 2004-05 and 2005-06. As a result, the average rate of agricultural credit from commercial banks rose from an annual average growth rate of 1.8% in the 1990s to 20.5% between 2000 and 2006. This trend held for the decade, and at the end of 2010-11, farm loan advances aggregated Rs. 446,779 crore compared with Rs.62,045 crore in 2001-02.

There was, however, no corresponding improvement in the farm economy. The overall growth in agriculture showed an impressive pick-up, growing from an annual average increase of 1.5% between 1999-2000 and 2004-05 to 3.5% in the next five years. However, much of this impressive increase has been due to growth in the production of cotton of about 12% a year. Increased frequency of farmer suicides only reinforces the claim that agrarian distress is still a cause for concern.

Secondly, most of this increase was inspired by what is officially defined as indirect finance—credit that flows to institutions supporting growth of agriculture as opposed to loans that flow directly to farmers. Of the big increase in farm credit that occurred in the first six years of the last decade, one-third was due to the growth of indirect finance.


File photo

File photo

This in turn has been brought about by liberalizing the definition of what constitutes indirect finance, including buying of land for the construction of godowns. This process, initiated from the early 1990s, accelerated in the last decade.

Thirdly, linked to the spurt in indirect finance, much of the increase in loan disbursal has occurred in the big-ticket category: between Rs. 10 crore and Rs. 25 crore, and Rs. 25 crore and above. Consequently, the share in total advances of loans with a credit limit of Rs. 25,000 dropped from 35.2% in 2000 to 13.3% in 2006.

In contrast, the share of loans of the ticket size of Rs. 25 crore and above increased from 5.7% to 16.8% over the same period. (Whatever happened to the UPA’s slogan of inclusiveness, which should logically have had the small and marginal farmer as the biggest beneficiary?)

Fourthly, as Chavan points out, there is a growing trend towards a preponderance of the disbursals flowing from urban and metropolitan branches in India. Its share, which was 16.3% in 1995, jumped to 30% in 2005.

In Maharashtra, one in two agricultural loans made out in 2008 flowed from metropolitan bank branches; Mumbai’s share alone was 42.6%. (It is a little difficult to imagine, despite the huge improvement in connectivity, a small and marginal farmer making the trip to an urban area to pick up the loan.)

Connecting the dots suggests that the concerns, evinced in some quarters, are legitimate. The obvious fact is that there has been a huge increase in farm credit in the last decade. However, it has not flowed directly to agriculture and particularly to the small and marginal farmers or to reduction of agrarian distress. The political economy of this trend is that this reinforces the existing power equations in rural India.

The fact that bulk of the disbursals have occurred in urban areas points to a trend that sectors associated with farming have been the greater beneficiaries. Given the liberal definitions, who is to guarantee that diversions of concessional credit into more lucrative avenues have not taken place?

So far this fear is expressed sotto voce, because data that can support or dispel this will be made available only after the results of decennial All-India Debt and Investment Survey are made available. That is still about two-three years away. Till then suffice to say, red flags have been raised in some quarters. Food for thought no doubt.

Anil Padmanabhan is a deputy managing editor of Mint and writes every week on the intersection of politics and economics. Comments are welcome at