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Issue No.: 575 | May 2015

Agriculture and Rural Indebtedness - VII

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 VIIth part of the series on the indebtedness of farmers, Professor Mohan Rao continues the discussion on farmers’ participation in development programmes and various policy initiatives such as the role of the State  is-a-vis Indian agriculture, the phenomenon of rural indebtedness, rural credit and the nature of safety nets to deal with risks and uncertainties.

Policy Initiatives

4. Safety nets to overcome risk and uncertainty At present the farmer alone bears all the risks while others enjoy the fruits of his labour and risk taking. In this context the following interventions are considered helpful in  mitigating the risks faced by farmers.

  • Crop insurance must be recast by considering the village as a unit with relatively low premia, to start with, to induce the majority of farmers to get into the scheme to make it viable and operative in the long run. 

  • Transparency in the settlement process of claims; this requires the involvement of Bankers’ and farmers’ representatives as part of damage committees to build confidence measures and facilitate greater participation by farmers.

  • The minimum support prices must be extended to all crops and they must be notified well in advance of sowing season to send right signals to the farmers to decide what to grow or not to grow.

  • There must be nodal agencies to purchase all major agricultural produce, as there are no such agencies for many crops. Introduction of an effective marketing extension system goes a long way in increasing awareness as well as enlightening farmers about the nature of market risks associated with the crops grown by them.

5. Measures to promote viability and profitability of farming The problem of viability of farming is of an urgent  nature and cannot wait till long-term solutions are found. The following deserve immediate attention:

  • Livestock production in India is the endeavour of sub-marginal, marginal and small holders contributing to the livelihood of over 70 million rural households despite the absence of a national extension support system and mostly depending on traditional money lenders for credit. Evolving a unified policy framework for livestock sector targeting women as development partners in animal husbandry projects – their successful implementation helps in a large measure to make small farms viable entities. 

  • Safeguarding and strengthening the livelihood and security of the resource of poor farmers and farm labour should be the basis of all trade and investment policies as rightly suggested by Dr. M. S. Swaminathan. In this context, investment in small agro-processing units in rural areas based on crop and dairying deserves attention as they help value addition and is livelihood intensive with potential for employment generation in the rural areas.

  • With the development of agriculture with advancing technology, women are losing avenues for their positive contribution to the economy of the family. In this context, imparting certain skills and developing professions exclusively for rural women helps marginal and small farm households to become viable and face crisis situations without resorting to extreme steps.

PROFESSOR R. M. MOHAN RAO, retired NABARD Chair, Waltair, Andhra Pradesh. 
The purpose of serialising his Paper 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.

[i] Email :, or write to Freedom First, 3rd floor, Army & Navy Building, 148 Mahatma Gandhi Road, Mumbai 400001.





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The National Scene

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Sunil S. Bhandare

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BJP’s strategy in J&K remains an enigma

H. R. Bapu Satyanarayana

Poor Farmer


The Modi Government

Saffronisation is Creeping Up On Us

Firoze Hirjikaka

The Rural Perspective - 6

Agriculture and Rural Indebtedness - VII

R. M. Mohan Rao

Point Counter Point : Every issue has at least two sides

Protocol Vs. Policy

Ashok Karnik

What is wrong with AAP?

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The Missing VIP

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Foreign Relations in the 21st Century

Modi Goes Abroad Again: Target Development Agenda at Home

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The Iran N Deal: Whose Fate Will it Seal?

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The Swatantra Party in Gujarat - A Historical Perspective

The Swatantra Party in Gujarat : A Shooting Star

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