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By Shamika Ravi
To address farmer suicides in India, we have to understand the finer nuances of what comprises farmer distress. The simplistic debt narrative has overwhelmed the discussion for too long. The state's response to this shrill narrative has been extending more institutional credit, loan waivers and write-offs.
Farmer suicides have fallen significantly over the last one decade, to less than 10% of all suicides. It remains, however, a politically emotional issue. Maharashtra had the largest number of farmer suicides for over a decade from early 1990s. Long-term National Crime Records Bureau (NCRB) data up to 2013 show that 76% of all farmer suicides are concentrated within six districts, and that nearly 60% of farmers who committed suicide own more than four acres of land and are predominantly cotton producers.
Some inter-state analysis comparing the two most farmer suicide-prone states, Maharashtra and united Andhra Pradesh, with two of the most backward states, Bihar and Uttar Pradesh, reveals interesting results. Over the last two decades, farmer suicide rates in AP and Maharashtra have remained very high, while in Bihar and UP it has remained consistently low. However, there are no obvious reasons to believe that farmer distress is lower in Bihar and UP.
Maharashtra is the suicide centre of India. This is because not just farmers, but all other demographics report the highest number of suicide in Maharashtra. Maharashtra reports a significantly higher number of suicides compared to poorer states like UP and Bihar among professions such as government and private service, and even students.
So from a public policy perspective, if we are to design appropriate interventions to check the incidence of suicides, Maharashtra should rank higher in targeting. And these interventions should be for the larger population beyond the state’s farming community.
Most policy interventions have been limited to debt. Suicides due to bankruptcy or sudden change in economic status account for an average of 5% of the total number of suicides in Andhra Pradesh and Maharashtra between the years 2002 and 2013. In shocking contrast, illness or poor health (mental and physical) accounts for approximately 30% of all suicides in the same states.
Approximately 30% of all suicides in AP and Maharashtra are farmer suicides. Only 5% of all suicides are due to debt or bankruptcy. So obviously there are other more important factors that should explain farmer suicides in this region. The long-term aggregate data strongly points towards poor health being an important factor. There is an urgent need to address distress within the farming community -- and overall rural areas -- through major reforms.
Indebtedness has been highlighted as the prime cause of farmer suicide in most policy reports. One from the Maharashtra government concluded that 93% of all these suicides are due to debt. Notable public intellectuals like P Sainath and MS Swaminathan have called for ‘ending the “debt deaths”’.
The incidence of indebtedness (IOI) is defined as the percentage of households that are in debt from institutional and non-institutional lenders. The National Survey Sample (NSS) data indicates that Maharashtra’s IOI is 31%, which is close to the national average. The IOI in Bihar and UP are also very close to the national average at 29.1% and 29.6% respectively. Yet there are serious variations in suicide rates.
Further, the NSS data suggests that debt burden, measured as debt to asset ratio, declines with increase in asset holding. So, poorer households are the ones that have a higher debt burden. This is true for both institutional as well as non-institutional debt. However, the suicide data reported by the Maharashtra state government indicates that incidence of suicide is much higher for households with larger land holdings. Nearly 86% of all farmer suicides in the state have more than two acres of landholding and 60% have more than four acres.
This brings us to the relevant issue of the share of institutional credit in overall rural debt in India. Rural Maharashtra has one of the highest share of institutional credit, amounting to more than 85%. Bihar, on the other hand, saw a severe decline in the share of institutional from 73% to 37%. And it is interesting to note that this coincides with a drop in suicide rates in Bihar.
So it appears that providing more and more institutional debt to counter rural distress is not working. Besides, it would still not resolve the puzzle why most demographic categories of Maharashtra, including housewives, students and daily wage-earners, are reporting the highest levels of suicides, as they are highly unlikely to access institutional debt.
(The writer is Fellow, Development Economics, Brookings Institution)
By Shamika Ravi
To address farmer suicides in India, we have to understand the finer nuances of what comprises farmer distress. The simplistic debt narrative has overwhelmed the discussion for too long. The state's response to this shrill narrative has been extending more institutional credit, loan waivers and write-offs.
Farmer suicides have fallen significantly over the last one decade, to less than 10% of all suicides. It remains, however, a politically emotional issue. Maharashtra had the largest number of farmer suicides for over a decade from early 1990s. Long-term National Crime Records Bureau (NCRB) data up to 2013 show that 76% of all farmer suicides are concentrated within six districts, and that nearly 60% of farmers who committed suicide own more than four acres of land and are predominantly cotton producers.
Some inter-state analysis comparing the two most farmer suicide-prone states, Maharashtra and united Andhra Pradesh, with two of the most backward states, Bihar and Uttar Pradesh, reveals interesting results. Over the last two decades, farmer suicide rates in AP and Maharashtra have remained very high, while in Bihar and UP it has remained consistently low. However, there are no obvious reasons to believe that farmer distress is lower in Bihar and UP.
Maharashtra is the suicide centre of India. This is because not just farmers, but all other demographics report the highest number of suicide in Maharashtra. Maharashtra reports a significantly higher number of suicides compared to poorer states like UP and Bihar among professions such as government and private service, and even students.
So from a public policy perspective, if we are to design appropriate interventions to check the incidence of suicides, Maharashtra should rank higher in targeting. And these interventions should be for the larger population beyond the state’s farming community.
Most policy interventions have been limited to debt. Suicides due to bankruptcy or sudden change in economic status account for an average of 5% of the total number of suicides in Andhra Pradesh and Maharashtra between the years 2002 and 2013. In shocking contrast, illness or poor health (mental and physical) accounts for approximately 30% of all suicides in the same states.
Approximately 30% of all suicides in AP and Maharashtra are farmer suicides. Only 5% of all suicides are due to debt or bankruptcy. So obviously there are other more important factors that should explain farmer suicides in this region. The long-term aggregate data strongly points towards poor health being an important factor. There is an urgent need to address distress within the farming community -- and overall rural areas -- through major reforms.
Indebtedness has been highlighted as the prime cause of farmer suicide in most policy reports. One from the Maharashtra government concluded that 93% of all these suicides are due to debt. Notable public intellectuals like P Sainath and MS Swaminathan have called for ‘ending the “debt deaths”’.
The incidence of indebtedness (IOI) is defined as the percentage of households that are in debt from institutional and non-institutional lenders. The National Survey Sample (NSS) data indicates that Maharashtra’s IOI is 31%, which is close to the national average. The IOI in Bihar and UP are also very close to the national average at 29.1% and 29.6% respectively. Yet there are serious variations in suicide rates.
Further, the NSS data suggests that debt burden, measured as debt to asset ratio, declines with increase in asset holding. So, poorer households are the ones that have a higher debt burden. This is true for both institutional as well as non-institutional debt. However, the suicide data reported by the Maharashtra state government indicates that incidence of suicide is much higher for households with larger land holdings. Nearly 86% of all farmer suicides in the state have more than two acres of landholding and 60% have more than four acres.
This brings us to the relevant issue of the share of institutional credit in overall rural debt in India. Rural Maharashtra has one of the highest share of institutional credit, amounting to more than 85%. Bihar, on the other hand, saw a severe decline in the share of institutional from 73% to 37%. And it is interesting to note that this coincides with a drop in suicide rates in Bihar.
So it appears that providing more and more institutional debt to counter rural distress is not working. Besides, it would still not resolve the puzzle why most demographic categories of Maharashtra, including housewives, students and daily wage-earners, are reporting the highest levels of suicides, as they are highly unlikely to access institutional debt.
(The writer is Fellow, Development Economics, Brookings Institution)
