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Issue No.: 571 | January 2015

Agriculture and Rural Indebtedness - V

R. M. Mohan Rao
Freedom from British Rule did little to improve the lot of the Farmer. This is so even today 67 years after Independence.

In this the Vth part of the series on the indebtedness of Farmers Professor Mohan Rao continues the discussion on cost of production and profitability and technologies that have helped increase agricultural production especially foodgrains and the risks these involve.

Trends in terms of trade are divergent depending upon the source of estimates, weights used and inclusion or exclusion of various items in the construction of indices of prices received and paid by farmers. However, a study on the terms of trade prepared for the Ministry of Agriculture, Government of India noted that during the period 1978-79 and 1999-2000 though macro policies such as money supply, trade liberalization, agricultural price policy and world agricultural prices have played a significantly positive role in determining the gross terms of trade in favour of agriculture, higher per capita agricultural production and relative prices for manufacturing have resulted in unfavourable terms of trade for agriculture. (State of Indian Farmer, Vol.15, P-36.)

Notwithstanding the problems and controversies associated with if the terms of trade, the performance of Indian agriculture in the liberalization period in terms of production trends of crops, capital formation and employment growth clearly reflect on the plight of the agriculture sector. (.See Annexure –V for details).*

(vii) Technology

Technological developments in Indian agriculture since mid-1960 should be credited for their achievements in increasing agricultural production, especially food grains. However, this exclusive focus on increasing production through new varieties with greater susceptibility to pests is also a cause for large production losses and worsening instability in the crops. This has affected the small and marginal farmers as they faced increased risks and uncertainty in addition to attendant health hazards and environmental degradation.

Needs and concerns with increasing production resulted in technological up-gradation of crops grown in irrigated areas to the relative neglect of dry land areas and ’orphan crops’. With very limited involvement of farmers in research in agriculture, technological developments resulted in situations where farmers’ concerns and requirements have not received priority. As Green Revolution technologies have reached a plateau, agricultural growth has to be more widely distributed and better targeted with focus on reducing regional imbalances. Similarly, there is need to shift the focus from increasing production to increasing earnings of individual farmers, particularly the small and marginal in unfavourable areas.

Technological developments in agriculture have totally neglected post-harvesting technology, which is critical to value addition of farm products, as well as to augment the incomes of farmers.

(viii) Extension

The significance of extension in transforming agriculture, particularly in the context of deceleration in agricultural growth on the one hand and preparing Indian agriculture to seize opportunities in a liberalized trade scenario on the other needs no emphasis. Public research and extension played a major role in bringing about the Green Revolution. The then existing system of extension was suited for the rapid dissemination of pre-set agronomic practices for the high yielding wheat and rice varieties. However, in the post-Green Revolution era, extension encountered many challenges in the area of relevance, sustainability and accountability. In the changing economic scenario and particularly in rain-fed farming areas where diversified farming systems with widely varying local conditions and risk-prone agriculture, the extension system faced its limitations and failures. It was found to be unsuccessful in programmes for natural resource management, integrated nutritional management, and diversified agriculture such as high-tech farming, horticulture, livestock activities and fisheries

(ix) Marketing

Notwithstanding the expansion of regulated markets, and offering minimum support prices for select commodities, agriculture has become a gamble in marketing. The market committees of the regulated markets are not able to provide the required facilities for marketing viz. shelter, godowns, facilities for processing, grading, quality evaluation, packaging and information on various commodity markets. As such commission agents and traders continue to dominate these markets. The irony of it is, it is not so much due to market forces but largely due to Government interventions of forcible procurement at prices fixed by it in periods of rising prices and leaving farmers to fend themselves in periods of fall in prices. This no longer augurs well for agricultural growth and well being of the country and needs immediate reversal.

Similarly, market imperfections with wide variations in prices at different marketing centres continue to persist. Extension is a totally neglected aspect in Indian agricultural marketing. Farmers are denied freedom to transport, process and sell the product on their own because of restrictions imposed by the State. There is no proper planning or organization for agricultural marketing. The unorganized sector in this area is more organized than the organized sector itself. The problem of too many functionaries and multiplicity of layers continues to haunt farmers to their disadvantage. Farmers are forced to pay market cess and fee without any service in return. Though MSP is fixed for select crops, they are not declared well before the sowing season nor is there any nodal agency for the implementation of MSP except for paddy and wheat.

(x) Social Infrastructure

Social infrastructure like education and health facilities are in a deplorable condition in the rural areas. Often, the emphasis is on expansion of the programmes without adequate attention being paid to the quality of services. Universalisation of primary education and ‘Health for all’ by 2000 AD have remained elusive goals. This is particularly true of rural India. The poor quality of education imparted at the primary and secondary level in government schools in the rural areas is devoid of purpose. They are neither able to procure any meaningful employment after completion of school education nor able to compete with their urban counterparts to get into professional courses like medicine, engineering, agriculture, veterinary, etc. The poor quality of available education facilities is forcing farm families to take undue risks in their anxiety to provide better education to their children. Private education even at the primary and secondary levels has become too expensive and beyond the reach of marginal and small farmers.

Similar to education, rural health infrastructure is also in a poor state. Despite the expansion of Primary Health Centres and their sub-centres, they have not had the envisaged impact on rural health services. Contrary to their basic objective of delivery of health services at the grassroots level, these centres did not reach adequately or uniformly, and large areas and population are really without even the most elementary health care. In areas where the infrastructure exists, the outreach and the extension part in many states is ineffective due to problems related to transport, lack of residential accommodation and interest in doing private practice among the professionals. These services are also impeded by under-utilization of existing infrastructure due to inadequate staff, supply and maintenance of equipment, medicines and lack of commitment on the part of the personnel in charge of these centres.

Given this unsatisfactory scenario, rural people are forced to approach private health services which are costly and beyond the capacity of many to bear. In fact, the incidence of growing debt burden, apart from crop losses and un-remunerative nature of farming is also due to the growing expenditure on education and health expenditure.

PROF. R. M. MOHAN, retired NABARD Chair, Waltair Andhra Pradesh.
The purpose of serialising this paper by Prof. Mohan is to invite readers to share their views on the issues raised and recommend policies that would ensure a fair deal for India’s farmers.

* Email:, or write to Freedom First, 3rd floor, Army & Navy Building, 148 Mahatma Gandhi Road, Mumbai 400001, if you are interested in getting a copy of the paper.

To be Continued






Other Articles in this Issue

Between Oursleves

Between Ourselves

S. V. Raju


Aspi Moddie


Balraj Puri


Prime Minister Modi – Reforms and Governance

Modi and His Alter-Ego

Firoze Hirjikaka

The Late unlamented Planning Commission

The Mint

Swachh Bharat

Rekha Rao

Foreign Relations in the 21st Century

“Look East” to “Act East” and “Link West”: New Direction and Dynamism in Indian Foreign Policy

B. Ramesh Babu

Why China Wants to be a Full Member of SAARC

Nitin G. Raut

Point Counter Point : Every issue has at least two sides

Return of a Jihadi

Ashok Karnik

The Hisar Seige

Ashok Karnik

Mamata’s Ire

Ashok Karnik

Shiv Sena’s Contortions

Ashok Karnik

The Tibetans’ Struggle for Freedom

Missing the Whole Picture

Tsewang Sonam

World Human Rights Day



Constitution – an Instrument of Governance of A Nation: Austinian and Ambedkarian Perspectives

B. N. Mehrish

Some Thoughts on Our Judiciary and the Media

H. R. Bapu Satyanarayana

Justice Delayed

Farrokh Mehta

Threats to Upright Bureaucrats and the state of Investigative Journalism

V. Krishna Moorthy

The Jhagada Dals

T. H. Chowdary

Bharatiya Sanskriti Bhavans

T. H. Chowdary

The Rural Perspective

Agriculture and Rural Indebtedness - V

R. M. Mohan Rao

Book Review


Nani Gopal Mahanta


Sheryar Ookerjee


Direndra S. Jafa

Educating Adults

Legalise Prostitution: Shift the Onus on the State

Hina Manerikar

Review of the Right to Information (RTI)

N. S, Venkataraman


Many Voices from the past



Sentencing Oscar Pistorius

Judge Thokozile Matilda

On the Medical Profession

Eric G. Campbell,

Satyarthi’s Nobel Gets Muted Response

Business Standard,

Nehru and Kashmir

Brig. Suresh Sharma

Defence Budget

Brig. Suresh Sharma
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