Problems of Rural PUnjab
Dr G S Kalkat
About 65% of the population is rural. Their economy depends largely on agriculture including dairy farming. In the 1960s when new high yielding crops became available, the State made commendable progress. The productivity and total production increased manifold. This was the result of Government policies of strengthening agricultural research and extension, marketing infrastructure, assured prices and credit for inputs and tube wells. The State can rightfully claim credit for helping country become self reliant in food. As the technology related mainly to rice and wheat crops, the farmers adopted these crops and their area increased manifold between 1965 and 2008. The area under wheat and rice during 1960-61 was 2.3 lakh and 14 lakh hectares which rose to 27 and 35 lakh hectares respectively during 2008-09. Similarly, the yield per hectare of these crops during the same years was 1.2 and 1.0 tonnes which rose to 4 tonnes and 4.4 tonnes respectively. It has, however, led to a number of serious problems. At present the very sustainability of current cropping system is under threat. The main problems are:-
i) over exploitation of natural resources (ground-water);
ii) poor economy of the small farm operators;
iii) declining education standard in rural areas; and
iv) rural indebtedness.
Currently, more ground water is used than the normal recharge and the water table is declining at a alarming rate particularly in the central districts of the State, cultivating rice crop on a large scale. At this rate, the large number of shallow tubewells will become non-functional and heavy investment will be required for digging deep tubewells. Small farmers will feel the pinch more severely.
Expert opinion and research studies indicate that reducing the rice area by 10 lakh hectares and stabilizing it at about 16-18 lakh hectares will bring back the ground water balance. The State of Punjab and its farmers are well aware of their responsibility to continue contribution to the food security. But for this, productive soil and adequate water both from rivers and ground water are essential. Because about 75% of the irrigation is from ground water in Punjab, its preservation is essential.
This problem is being solved by educating the farmers not to grow two crops of paddy, avoid early transplanting of paddy, diverting some area to crops requiring less water including short duration paddy and basmati. To ensure that transplantation of paddy is not done before 10th June. “The Punjab Preservation and Sub-Soil Water Act” was enacted during 2008. The farmers have adopted the recommendation and the result is quite encouraging. The electricity consumption has come down and further water table fall has been checked. Maize was an important crop in the 1970s. Now new hybrids are available which can be adopted over at least 1.5 million acres. However, like wheat and rice, its marketing at remunerative price is essential.
Small Farmers’ Economy
Small farmers’ holdings are uneconomical. It is estimated that in Punjab about 3 lac farmers operate less than 5 acres of land. They constitute about 30% of the total farm holdings but own/cultivate only about 8% of the total land. Such farmers are poverty stricken. Another 3.3 lac farmers operate upto 4 hectares (10 acres) and their net income from wheat and paddy crops - the dominating crop system in the State, is less than the average per capita income of the State. These farmers should either be assisted to (1) get off-farm employment, or (2) grow high value crops and adopt commercial dairy farming. For off-farm employment, it would be necessary to provide them training in vocations which are at present needed by the industry or service sector. This may take long. In the meantime they should be provided viable options. Fruits and vegetables are high value crops. With the overall improvement in the economy of the country, the demand for these crops is rising. Fruit crops have a long gestation period. Small farmers will find it difficult to adopt fruit farming. They should, therefore, be assisted to cultivate vegetables. These crops are capital and knowledge intensive. Besides, these are labour intensive and will provide employment to family members around the year. Such farmers will need capital assistance, training and in-field guidance.
Experiments conducted at PAU, Ludhiana have shown that vegetables grown under net house (green house) give higher yield, have better quality and can also be grown during off season with bare minimum use of pesticides. The Punjab Government decided to introduce this technology to the farmers. Traditional green houses are very expensive and are beyond the reach of small farmers. Two low cost net houses of 500 sq. meters each will cost about Rs. 1.8 lac only. Now, an assistance of Rs.80,000/- for a set of two net houses is available under ‘Rashtriya Krishi Vikas Yojana’ scheme. The structure of low cost net house is expected to last for more than 15 years and UV Stabilized net covering will require replacement every three years. The net can be stitched by local tailor and the farmers would not face any difficulty to replace the covering of structure.
The average annual net income from one kanal net house of 500 sq. meters is estimated at Rs.70,000/-. A set of two will generate about Rs. 1.4 lac annually. Even after paying loan installments, the net income exceeds Rs. One lac per year from two kanals. This technology has been demonstrated in almost all the districts of the State and the farmers are fully convinced about its usefulness. This activity needs to be extended on large scale and at least one lac small farmers be covered on a priority basis. Sufficient funds as capital assistance are available for this purpose under RKVY scheme of the Government of India. This will not create glut situation as only 10,000 hectares additional area will be covered under vegetables in the State under this programme.
Banana cultivation was introduced by the Commission a small scale. From the experience of last two years, it is safe to recommend the cultivation of banana in Punjab. Virus free tissue culture raised plants were procured and supplied to the farmers at 50% cost. About 1100 plants are planted per acre. The planting material is subsidized upto 50% of the cost. Once planted, the farmer should be able to get 4 crops from the same material. [In case, if during the first year of planting (first fortnight of February), the winter is not very severe, the farmers can get 4 crops in four years; otherwise at least 3 crops in four years are assured]. Most of the farmers were able to get an income of Rs. One lac per per acre. Cultivation of banana should be extended over large area. There is no problem of marketing.
Commercial Dairy Farming:
Farmers owning 2-4 hectares of irrigated land can easily maintain a dairy herd of 10-20 high yielding cows. Currently, 10 HF cows cost about 4.5 lakh. To exploit their inherent yield potential, it is essential to have a proper shed. A model of such a shed was prepared in consultation with Department of Dairy Development, GADVASU and practicing dairy farmers. Two model sheds, one at Bija near Khanna and one at Tarn Taran were set up for demonstration purposes at a cost of Rs. 5 lakh each. This shed can hold 10 milch cows, 5 heifers, 5 pregnant non-milching cows and 5 calves. Animal identification through micro chips and insurance was introduced about two year ago. 100% cost of the chip (Rs. 500/-) and 50% of the insurance of the animals was provided as an incentive. From this year (2008-09), Rs. 1.5 lakh as capital assistance for construction of the approved shed, full cost of the chip and full insurance premium for the first year is provided under RKVY programme. During 2006-2008, more than 2000 new units of at least 10 hybrid cows each, have been set-up.
The above cited three projects can now be taken up on an extended scale by the concerned Departments. In fact, the State should aim at helping all the small and marginal farmers over a period of five years. This will revolutionize the economy of the farmers.
Knowledge is power. For gaining knowledge, education and skill development are basic. Are we empowering the rural people to be able to compete for available opportunities? Let us examine the current situation in Punjab and find the answer to the above question.
Various studies/seminars held revealed that the State of Education available to the children in the villages is alarming. There are very few higher secondary schools in the rural areas that have science subjects and those exist, have very poor teaching infrastructure. Teachers don’t stay in villages/schools and absenteeism is rampant. Headmasters / Principals lack the will and power to enforce discipline and accountability, hence teachers are just not accountable. As a consequence, students do not opt for science or commerce subjects. Thus, they are unable to compete for professional higher education. The Punjab Agricultural University has almost all students from urban non-farming families. If this is the situation in the subjects of the Agriculture stream, one can well imagine the situation in respect of engineering, medical and other professional streams.
The condition is no better in case of higher education also. A recent study conducted by Punjabi University Patiala revealed that only 4% of the students in four Universities of the State (GNDU, PAU, Punjabi & Panjab) hailed from rural areas during the Academic Session 2005-06. Why so? Simply because the standard of education is poor and the students can not compete for admissions to colleges. The situation is still worse in case of education in professional colleges where rural students form 3.7% only of the total students admitted.
This situation is a very poor reflection on the implementation of education programme in the State which is essential for empowering the rural population to compete for higher end opportunities. A large number of private schools/teaching shops have been opened in the rural areas. They charge heavy fee from the students. The poorer sections, largely small farmers and landless people in the villages can not afford the expenses. The result is obvious. The poorer section of the society, who are in majority can not get the quality education and consequently all opportunities available in this technological era are denied to them They will remain backward The 8 or 9 percent growth in the country will not reach to them.
There is already heavy pressure of population on agriculture land. With every new generation the size of holding is decreasing, making most of the holdings economically unviable Unless rural education is improved to provide opportunities to compete for jobs In industry and service sector there will be serious economic and social crisis in the rural areas. The answer to the question raised in the beginning is not difficult to find under the current education scenario. We have failed.
NGOs can play an important role. In this regard Some NGOs have already started providing coaching classes for competitive examination. Their effort needs to be multiplied manifold. This would need devoted efforts with regard to financial support selection of suitable locations (schools/colleges) coaches and above all time.
Let us remind ourselves that poor education in the rural areas always reproduces poorly skilled human resource Poorly educated parents will hardly be able to inspire their children To break this vicious circle Primary and High / Higher Secondary Education in the rural areas must be improved NGOs besides the Govt must contribute their time and financial resources to empower the rural people to compete and progress.
Farmers Indebtedness in Punjab
The Institutional credit to the farmers has increased over time but it has not been adequate enough to make a real significant dent on the non-institutional lending to the farmers. The institutional credit to the farmers also comes at a cost, cost other than the rate of interest.
The non-institutional lending in Punjab is enormous and heavy burden to the farmers. The institutional sources reached a climax in 1991-92 when their share in the farmers’ borrowings was 81.9 per cent in Punjab and 66.3 per cent in India (NSSO, 1992). In its latest survey for 2003 released in 2005, the NSSO gives estimate of the share of formal sources at 47.8 per cent for Punjab and 57.7 per cent for India, a very drastic decline indeed, especially in case of Punjab. It shows that the non-institutional sources gained the ground and prominence again in 1990s. In fact it reached below 50 percent mark very sharply by even mid 1990s.
Whatever be the estimates of indebtedness of the Punjab farmers, the overarching conclusion is that Punjab farmers are heavily indebted. Shockingly, the present estimate of Punjab farmers’ indebtedness, based on about Rs.13000 crores of institutional lending as of March 31, 2007 and their share at 50% of the total loans to farmers is being placed at Rs.26000 crores in 2007.
A recent study sponsored by Punjab State Farmers Commission and conducted by Punjab Agricultural University, Ludhiana indicate that on the overall, the marginal, small and semi-medium farmers up to 4 ha were indebted up to about 90 per cent of their income, and the medium and large farmers up to about 50 per cent of their annual income. There are 28 percent farmers whose indebtedness was more than their annual income who could be called as living under the stress level of indebtedness. And the indebtedness approaching to bankruptcy, i.e. when the loan is more than two years family income, and is close to acute / extreme stress includes 12.8 percent of the farm households. And this was inversely associated with the farm size. About 19 per cent of the marginal and small farmers were under acute burden of indebtedness compared with less than 6 per cent of the medium and large farmers.
It was Punjab where Malcolm Darling in his monumental work as early as 1925, remarked that, “the Punjab which is the most prosperous province in the country is also possibly the most indebted.” He reported that nearly 4/5th of the Punjab peasantry was under debt to the tune of 5 to 6 times their annual income. It was for this reason that Malcolm Darling also made the historic remark that, “The Indian peasant is born in debt, lives in debt and dies in debt”. What a prophecy that is true even today!
Farm Indebtedness and Farmers’ Suicides
The Punjab State Farmers Commission sponsored the study “Suicides in Rural Punjab”, which was conducted by IDC in 2006. Two hundred suicide cases were traced and studied thoroughly.
The suicide is a complex phenomenon. Majority of the farmers who committed suicides in addition to being heavily under debt, were also drug addicts; they had family disputes which in many cases were the predisposing factors.
The rural sector in Punjab is lagging far behind in development; the rural-urban disparity is widening. In 1970-71, the rural population constituted 76 per cent; the share of Net State Domestic Product (NSDP) from agriculture and livestock was 58 per cent. Overtime the share of agriculture and livestock in NSDP declined but that of rural population remained almost the same. In 2004-05, the rural population constituted 66 per cent but the share of agriculture and livestock in the NSDP declined to 37 per cent only.
Characteristics of Suicide Victims:
1. Indebtedness was reported major cause of suicides by 30% of the victims families followed by conflict at home and poor financial position of the house.
2. Around 86% of the Victims were actually under debt
3. Majority of the suicide victims were small and marginal farmers.
4. Majority of the suicide victims were illiterates or semi literate.
5. A vast majority of the victims belonged to young and middle age groups.
6. Majority of the suicide victims had borrowed money from informal credit agencies and for consumptive purposes.
7. Declining income due to ever increasing cost of production and stagnant farm productivity output prices and high amount of debt were reported to be major causes for non-payment of loans.
Summery and Policy Implication
The agrarian crisis in Punjab is the economic crisis. Agricultural growth in Punjab has slowed down. The cost of inputs increased faster than the output prices, especially since mid 1990s to date. The cost of capital investments in the farm sector has increased even faster. The drag on natural resources, especially groundwater, has further dragged the farm incomes towards digging deeper for submersible pumps installation. The Punjab farmers, during the era of high growth became used to a certain level of living standards and social festivities, which demanded increase in incomes as well and in the absence of that, it led to increased borrowings.
How to Retrieve the Situation?
The strategy has to encompass not only the short-term or immediate solutions or relief to suicide victims but also to long-term measures that address the agrarian crisis. The growth in farm incomes has to be revived and rejuvenated; the public investments (infrastructures, institutions and development of new technology) have to be increased manifold.
Lending to Small Farmers
The informal credit is available at very heavy rate of interest. This is almost 2 to 3 times the rate charged by institutional sources. Currently, as stated in the earlier paragraphs, about 50% of the farmers credit needs are met by the informal institutions. To reduce this heavy burden, the share of formal credit (Cooperatives and Commercial Banks) must be raised substantially. Although, at present, about 18% of the bank lendings are made to agriculture sector, but unfortunately the share of the small farmers who are in vast majority, is almost negligible. Credit procedure must be simplified to ensure adequate and easy availability of credit to the farmers particularly the small ones. It may improve the situation if some bank branches in the rural areas are dedicated for lending specifically to the small farmers against approved enterprises.
Improving small Farmers’ Capacity to Adopt High Value Enterprises
The small farmers should be assisted to adopt the cultivation of high value crops, fruits and vegetables, dairy, poultry etc. Since these enterprises are both capital and knowledge intensive, it is essential that small farmers are provided capital assistance and training – both institutional and in-field. Simultaneously, marketing of the output should be ensured.