No.s 66-67, May 2017
No.s 66-67 (May 2017)
VIII. Effect of 25 Years of Neoliberal Policy: Tightening Grip of Parasitic Forces
Effect of 25 Years of Neoliberal Policy: Tightening Grip of Parasitic Forces
The immediate causes of the present agrarian distress can be located in the neo-liberal policies of the last 25 years. Among these are: the reduction of public sector investment related to agriculture, the reduction of bank credit to agriculture, the near-winding up of public sector extension services, the reduction of Government expenditure in the rural areas, the opening up of agriculture to imports, the reduction of public sector procurement and price stabilisation measures, the increase in administered prices of inputs, and the large-scale forcible acquisition of peasant lands for various projects. In this sense, the present agrarian distress has been wrought by neo-liberalism. These neo-liberal policies in turn can be traced to the predatory interests of foreign investors and the Indian corporate sector (which itself has innumerable ties to global capital).
At the same time, all of these policy measures operate in the context of the existing structure of agrarian relations in India. In the following article, we describe how, in fact, the policies of ‘globalisation’ and ‘liberalisation’ have increased the oppressiveness of agrarian conditions and the stranglehold of parasitic forces. During this phase, the withdrawal of bank credit has been accompanied by the tighter grip of usurers on the peasantry. Growing commercialisation, instead of promoting the growth of productive forces in agriculture, has further squeezed the producers, prevented them from keeping any surplus to reinvest in productive activity, and made them even more helpless before the usurer. The stagnation of manufacturing employment in this period has forced peasants to continue in agriculture even when agriculture does not yield a living. Some non-farm employment has grown (e.g. in the construction sector), but it offers neither decent pay, nor security.
These constraints have been the subject of many studies in the past.
In these circumstances, terms such as ‘agrarian reform’ and ‘institutional change’ signified doing away with the prevailing retrogressive relations, in essence eliminating or reducing the power of the parasitic classes. However, despite any number of official committees, surveys, and legislations, negligible progress was made in bringing about such change, underscoring the grip of the parasitic classes on the State machinery itself.
By the mid-1960s, the emphasis shifted from institutional change to increasing productivity in select, relatively developed, pockets (the ‘Green Revolution’), ‘building on the best’ so as to meet immediate shortages. (This set in motion another chain of consequences, increasingly negative over the years, with which Indian agriculture continues to grapple.) No doubt, the eruption of militant agrarian struggles for land in the late 1960s briefly revived talk of land reform, leading to the setting up of more committees and more legislations; but again, this was not accompanied by any serious implementation.
Thereafter, as the Planning Commission Working Group on Land Relations (2006) remarks,
The new meaning of ‘agrarian reform’
Indeed, not only official quarters, but other influential economic commentators and academia, too, now take either a sanguine or a fatalistic view of the concentration of agricultural land. True, they say, true, landlords evaded the operation of land ceilings in various states through a variety of means, including the use of several loopholes in the law; true, successive governments displayed lack of political will to enforce genuine land reforms; true, the area declared surplus in the past six decades was less than 2 per cent of the cultivated area, and even less was actually distributed, of which much was of poor quality. Yet, they say, sheer population growth and the consequent subdivision of holdings have resulted in rendering the demand for redistribution of land irrelevant or even harmful. Today, large holdings are a smaller percentage of the total holdings, account for less of the land, and their owners are less powerful than in the past. Moreover, say these commentators, land itself is less important as an asset than in the past. Hence, while a little ceiling-surplus land may be available for distribution, and this could provide relief to some very poor households, redistribution as such has very limited relevance to addressing the agrarian crisis or seeking agrarian transformation. So runs the current dominant view.
Similarly, it is interesting to observe the shifts in the official attitude towards tenancy. Over the decades, we have witnessed a strange progression: The institution of tenancy was initially viewed as an important, perhaps the most important, obstacle to agrarian progress; and so, seemingly pro-tenant laws were passed; but the way in which these laws (or their loopholes) were interpreted and implemented amounted to an attack on the tenants, with evictions on a colossal scale; thereafter tenancy has persisted, but has gone ‘underground’, making the tenants even more insecure; at the same time, much land of both large and small holders lies fallow for fear of its alienation under the laws; this entire miserable state of affairs, for which the landed interests and their state machinery are responsible, is then made into an argument for reviving and legitimising tenancy.
The extraordinary phenomenon of peasant suicides, which has grown rapidly under the neoliberal regime, has forced two other aspects of the agrarian question into public view: namely, exploitation by usurers, and exploitation by traders. However, the dominant economic commentators view these two questions separately from each other (even though the usurer and trader are often joined in the same person); and they separate both from the question of land. Their proffered official solutions are thus select external interventions – such as ‘financial inclusion’ of farmers through the opening of bank accounts, and direct purchase of farm output by the corporate sector, which, in their view, would pay higher prices to the peasant. At any rate, they view such problems as transient, since they anticipate the rapid transfer of most peasants out of agriculture.
The phenomenon of peasant suicides is also linked with the policy of so-called ‘globalisation’: rising input prices, dependence on firms like Monsanto for seeds, dependence on private extension services, systematic undermining of public procurement, opening of India to agricultural imports, and increased vulnerability to swings in global commodity prices. At the same time, these forms of exploitation are largely mediated by local dominant classes.
The sway of the rural propertied
Any programme of conscious agrarian change would have to be carried out through a political process, and hence would confront the question of political power, i.e., class rule. (Equally, any attempt to address questions of political power in India would have to confront the agrarian question.) Regardless of the changes that have taken place in the last six decades, the vast diversity of conditions across the country, and the official spread of ‘panchayati raj’, even now the Indian village is hardly a democracy of small owner-peasants. Rather, the Indian village is by and large a site of profoundly oppressive and arbitrary power by the rural propertied classes.As a study of the distribution of household wealth in India puts it, “Land continues to remain the symbol and substance of both wealth and power in rural India.”3
Land ownership is key to the sway and exercise of authority by the rural rich. Other factors – ownership of other productive assets; control over nominally common property resources (water, common lands, government land); caste domination; influence with officials and parliamentary politicians, influence on elections – play their role in conjunction with land ownership. The dominant land holders also shape the markets for credit, inputs, output, and labour.
In rural India, unlike in developed countries, the higher a household is placed on the income ladder, the less is the diversification of its assets. That is to say, the share of land in total assets rises with wealth. For the richest 14 per cent of rural households, land accounts for 73 per cent of assets, and buildings for another 15 per cent; while machinery, equipment, and financial assets all account for very low percentages. This has been the position, with little change, in the last few decades.4
The area under holdings of 10+ hectares has declined over time, but output per hectare has risen over time. Meanwhile, inequality in land distribution has not declined. According to the latest NSS of Land and Livestock Holdings (2013), 2.2 per cent of ownership holdings account for 24.6 per cent of the area, and 7.2 per cent of the ownership holdings account for 46.7 per cent of the area.
While agriculture as a whole has suffered under the neoliberal policies of the last 25 years, there is a wide cleavage among the different classes in agriculture. According to National Sample Survey data, small and marginal households (owning less than 2 hectares) account for 87 per cent of farmer households. Their average net income from farming (cultivation + animals) was very low, indeed lower than their consumption expenditure; evidently, they are only able to sustain themselves with the help of earnings from other sectors, borrowings, or asset sales. But for households with 4-10 hectares, net income from farming was 6.4 times that of the average for small and marginal households. For households with over 10 hectares, the figure was 14.5 times the average for small and marginal households.5
As with all surveys, it is likely that the income of the top segment is underestimated in these data. Those with less land may have to buy inputs at higher prices (or buy inadequate inputs), may lack access to water, may lack access to bank credit, and may be forced to part with their output at lower prices than in the case of those with larger holdings.Another class that has noticeably flourished under neoliberal policies is the class of usurers. According to official data, the share of moneylenders, traders and landlords in rural debt rose by 6 percentage points between 1991 and 2012-13, and the percentage of rural households in debt rose by 8 percentage points in the same period.6
This would have resulted not only in a larger flow of income to usurers, but even, to some extent, the transfer of land and other assets from the indebted. Moneylending and trade have been interlinked, inflating the price at which the trader sells inputs to the peasant and depressing the price at which he procures the peasant’s output.
While some classes are thus able to extract surpluses, a dynamic agrarian class engaged in concentrating holdings, hiring labour and practising capitalist farming has not come to predominate. A striking peculiarity of India’s agriculture is the continuing proliferation of small holdings. The first Agricultural Census (1970-71) put the number at 71 million; since then it has risen steadily to reach 138.4 million in 2010-11. Thus the average size of holding has declined from an already low figure of 2.28 hectares in 1970-71 to a mere 1.15 hectares in 2010-11.7
Agrarian democratisation, a necessary stepIt has been shown that, applying a ceiling of 8 hectares to the official data of land holdings, the land available for distribution would be more than three times the entire amount distributed to date.8
This finding is no doubt a telling exposure of the land reform process in India, but the process it talks of is nevertheless fundamentally different from the approach adopted in China to carrying out land reforms during 1949-52.
Firstly, it is worth remembering that the average size of landlord holding in China before land reform was a little over 8 hectares, and that of rich peasants at 2.5 hectares.9(Both landlords and rich peasants were defined not by size of holding but by their role in the system of production and their relation to the means of production.) Applying the ceilings talked of today for India would presumably have yielded very little land in China. Secondly, in China, it was not merely ‘ceiling-surplus’ land that was redistributed. Rather, the entire land of landlords was confiscated, as well as leased-out land of rich peasants, and in the course of redistribution landlord households were given only as much land as poor peasant and farm labourer households would own after the reform. Thirdly, land was not acquired and distributed by Government officials. Rather, the newly-born republic engaged itself for three years in awakening and organising the peasants to stand up to the domination of the landlord-gentry class, overcome the social, cultural and psychological barriers that held them down, and distribute the land themselves. This entire process, then, signified the breaking of the power of feudal forces in the villages and its replacement by a new, democratic power.
Without this, the necessary democratic base would not have existed for China to move to co-operatives and, later, communes. In July 1956 India sent two high-powered delegations to China to study agrarian cooperatives and agricultural planning.
The Reports [of these delegations] not surprisingly noted that the remarkable Chinese success derived from their transformation of the rural class structure and that little could be expected in India without similar change: “To create an atmosphere favourable to the formation of agrarian co-operatives . . . (the) atmosphere should be one of equality and non-exploitation. In creating such an atmosphere, land reforms will play a vital role.” This view was reiterated by many influential advisers of the Government. Daniel Thorner, for example, wrote: “But the success of rural cooperatives presupposes a modicum of social equality, political democracy, and economic viability among the villagers. These preconditions have not been present in village India . . . Two things must happen: (i) the power of the village oligarch must be broken . . . and (ii) the Government must become an instrument of the ordinary people . ."10
Thus, land reform is not a mere exercise in improving allocative efficiency, but an essential first step in the democratisation and further development of the agrarian sphere, which in turn is a pre-requisite of sustainable and balanced growth of productive forces of the country as a whole.
Land inequality underestimated
At any rate, official figures greatly understate the real scale of inequality, because a sizeable proportion of landholdings are missing from the official figures. It is well known that, in order to avoid land ceiling laws, land is often held in other, or fictitious, names (benami holdings), thus hiding the inequality and showing larger holdings as multiple, smaller ones. Further, as a recent study concludes, the NSS methodology itself lessens the chances of capturing the largest landholdings, leading to substantial underestimation of the area possessed by the largest landholders in the country as well as of the inequalities in agrarian landholding generally. This seems to explain most of the huge gap between the NSS figure for aggregate crop land and the corresponding figure from other official sources (which are more complete and reliable for the aggregate figure). This gap is growing alarmingly over time. In the latest data, the gap between the NSS and two other sources is 38 and 46 per cent, respectively.11
Nevertheless, a study using even such NSS data reveals that the percentage of land cultivated by the bottom 50 per cent of households has fallen, and the percentage cultivated by the top 10 per cent has slightly risen (see Table 8).12 Under the reign of neoliberal policies, the meagre 4.1 per cent of land cultivated by the bottom half of rural households has fallen to 0.4 per cent, while that cultivated by the top 10 per cent has risen by 1.6 percentage points.
The study further shows that the percentage of landless rural households (i.e., without land for cultivation)13 has risen sharply, and they now account for nearly half of all rural households. (The Socio-Economic and Caste Census, 2011, puts the figure of rural landless households even higher, at 56 per cent.) These are households that even earlier depended mainly on manual labour, but have now lost what little crop land they had.
At the same time, the study notes that the proportion of households self-employed in agriculture (i.e., independent peasants) has fallen only slightly. That is, poor peasants are hanging on to cultivation even in the face of abysmally low returns from agriculture.
Common property resources
According to the NSS, 15 per cent of the country’s geographical area consists of common property land resources (CPLRs). Of this, nearly 6 per cent consisted of community pastures and grazing grounds, and village forests and woodlots. Nearly half the households in the country collect materials from common property land resources, and two-thirds of the households which use irrigation draw water from common property water resources (CPWR). While 62 per cent of the households in the rural areas use fuelwood, more than half of this fuelwood – half a tonne a year per household – comes from CPLRs. More than half the households in the rural areas own livestock, and perhaps more than half of these households use CPLRs as a source of fodder. All these ratios are higher in hilly regions, many of which are also home to the tribals. The dependence on common property resources rises with the backwardness of the village and the poverty of the household.
To the extent common property resources are drawn on to meet subsistence livelihoods, through direct satisfaction of wants, they do not lend themselves to being translated into monetary values. Nevertheless, one study attempted to put a monetary value on ecosystem services and other non-marketed natural goods; by its methodology it estimated that they accounted for 47 per cent of the sources of livelihood of 352 million rural and forest-dwelling communities in India.15
The scale of CPLRs is in fact even larger than 15 per cent of the country’s geographical area. One study notes that, apart from the NSS’s definition of CPLRs, “government forests, excepting those in extremely remote areas, are also used as common property. Since such government forests constitute at least 19.3 per cent of the country’s land area, roughly 34 per cent of the country can be considered common land."16 In fact, “according to the Government’s own data, at least half of India’s forests fall within the definition of community forests under the Forest Rights Act.... However, barely 1.2 percent of this area has actually been recorded and recognized.”17
Much nominally common land is actually under the control of private interests, and the encroachment continues apace. The NSS finds that even taking a narrow, de jure, definition of CPLRs, they have been declining at the rate of roughly 2 per cent every five years. Summarising the literature, Chopra and Dasgupta say:
The real scale of private appropriation of CPRs, however, becomes clear only in the course of mass movements on these questions. For example, landlords and rich peasants have long put up ‘dummy candidates’ from the Dalit community in order to bid for panchayat/nazool land (reserved for Dalits) in Punjab. This fact gained public attention only when mass organisations of agricultural labourers and other progressive sections in that state waged a mass struggle against it. Indeed, more generally the reality of land relations in India would become evident only in the course of class struggle.
In the period of ‘liberalisation’ and ‘globalisation’, rapid corporate sector growth has involved a massive private seizure of CPRs, particularly forest lands. Thus the State’s policy of not recognising community forest rights and other common property rights is not out of sheer lethargy or inefficiency, but a necessary part of its role in furthering corporate plunder.
Tenancy refuses to fade awayTenancy legislations were passed in different states in the 1950s and 1960s. In the actual conditions prevailing (of dominated, unorganised tenants, dominated landlords, and a State machinery hand-in-glove with the landlords), these legislations were followed by the ejection of tenant families from 33 per cent of total agricultural land19 – in the name of ‘resumption of personal cultivation’ by the landlords, for which the Acts thoughtfully left provision. After this foreseeable outcome, official stances slowly shifted. In 1976 the National Commission on Agriculture declared: “Tenancy reforms should be directed to the stage of finally breaking up landlord-tenant nexus. Agriculture should be treated as a family occupation of the peasant cultivator and not as a source of subsidiary unearned income.” But by 2006 the Planning Commission’s Working Group on Land Relations (WGLR) remarked fatalistically: “Conferment of ownership rights on tenants remains the optimal goal, which does not seem to be achievable in the foreseeable future.”
Today the Niti Aayog’s Expert Committee outright declares that “land leasing laws framed in the wake of independence have lost their relevance today. Lease farming is an economic necessity and not a symbol of feudalism, as it was thought before. The laws were enacted in the context of exploitation of the peasantry. The current situation, however, is different... While the economic and political powers of absentee landowners have eroded, the rural poor have become politically more powerful through panchayat raj institutions and other democratic process.” In the Committee’s view, “tenancy results from a voluntary agreement between the land owner and the tenant to lease out and lease in land for mutual benefit.”
The Expert Committee has drafted a model Act to legalise land leasing. It is no doubt true that, for fear of creating tenancy rights, many absentee landowners refuse to rent their land to those who are eager to cultivate it; or they refuse to enter into a formal, written agreement, as a result of which the tenant is unable to get bank credit, insurance, and other facilities. Poor peasants lose thereby. Therefore it seems on the face of it reasonable, and even pro-poor, to create a legal framework for land leasing which protects the landowner from tenants claiming security of tenure, and ensures that a written agreement between the owner and the tenant is registered with the authorities.However, such a framework would have one meaning after the institution of radical land reforms and the democratisation of rural society; a very different meaning in the absence of such reforms, and with vast disparities of social and economic power. Ignoring the reality that the overwhelming majority of tenants remain small and marginal farmers, almost every provision in the Niti Aayog’s draft model Act is framed to protect the land owner.20 In these circumstances, it should be simple for the land owner, who is generally the dominant party, to dictate terms.
Tenancy has no doubt declined over the last 50 years, but it stubbornly refuses to die out, and is particularly important in certain regions. The Planning Commission Working Group on Land Relations observed:
The Koneru Ranga Rao committee set up by the Andhra Pradesh government found in 2006 that the incidence of tenancy was as high as 50 per cent in some areas of the state. Similarly, a Reserve Bank of India field study in 2010-11 observed a very high prevalence of tenancy (involving 60-80 per cent of cultivators) in coastal Andhra Pradesh, with rentals constituting 35-40 per cent of the cost of production.21 According to the report of the Commission on Farmers’ Welfare, Andhra Pradesh,
For the state of Bihar, the NSS finds only 3 per cent of the operated area under lease in 1991, but extensive field surveys estimate that nearly one-third of the operated area in the state is under lease.23 According to D. Bandyopadhyay, who chaired the Bihar Land Reforms Commission of 2006-08,
The Commission report affirms: “It is evident that there is a structural bottleneck in Bihar agriculture due to very queer pattern of land ownership and very extortionate system of tenancy-at-will which are causing great impediment to accelerated rate of agricultural growth” (Report of the Bihar Land Reforms Commission, p 4).
The Bandyopadhyay Commission made very modest recommendations – among other things, that the poorest agricultural labourers be allotted 0.66 to one acre of ceiling surplus land, and that the state government enact a Bataidari Act to ensure secure and heritable right of cultivation to all tenants/sharecroppers with 60 per cent share of the produce (if the landowner bears the cost of production) or 70-75 per cent of the produce (if the bataidar bears the cost of production). The rural elite effectively vetoed the Commission’s recommendations. Thus the Nitish Kumar government did not even resort to the usual device of saying the recommendations were ‘under consideration’; instead it declared in October 2009 that it would not implement its own Commission’s recommendations.
The phenomenon of ‘reverse tenancy’, whereby larger landowners lease land from smaller ones, requires further investigation to see whether it really represents the growth of a dynamic and more productive agricultural class concentrating land in its hands. It could also reflect the operations of usury and landed power: That is to say, leasing at depressed rates may be forced upon the small peasant at the end of a process of indebtedness, without any necessary gain in productivity. An instance of this process can be seen in water markets (see below).
Tightening grip of the usurerFor some time, it was argued that usury in India was on the decline due to the spread of rural banking. And indeed, after bank nationalisation, official figures for rural indebtedness showed a steady drop in the percentage of total rural debt owed to non-institutional sources, in particular moneylenders and landlords. However, it was likely that some of the debt owed to these sources was not declared by respondents to surveyors, thus understating the size of the debt.25
After the onset of liberalisation in 1991, the share of moneylenders has experienced a sharp resurgence, as reflected both in official data and in the steep rise in peasant suicides. Even now, however, there is reason to suspect that the full extent of debt to moneylenders is underestimated in official data. A number of studies indicate that peasant indebtedness to the non-institutional sector (mainly moneylenders and traders) is at least twice that to the institutional sector (banks, cooperatives, Government).26 For example, a World Bank-NCAER survey found that 21 per cent of rural households in U.P. and A.P. had a formal loan outstanding, but 40 per cent had an informal loan outstanding. In brief, the hold of the moneylender is not really captured in official data.27
This is also indicated by the sizeable gap between the short-term credit needs of agriculture and actual lending by banks and cooperatives: In 2002-03, institutional sector lending amounted to only 15 per cent of the value of inputs in agriculture.28 An official task force found that the number of active Kisan Credit Cards was only 50.6 per cent of operational holdings, and 48 per cent of farmers interviewed felt that the sanctioned limits for credit were too low.29
While there are some data (however incomplete) and descriptions regarding peasant dependence on moneylenders, it is difficult to find a study or even descriptive material regarding the other side of this relation, namely, moneylenders and their operations. The official task force on agricultural credit cited above, which visited 45 villages across 17 states, noted that, while moneylender debt came at high interest rates, even 5-10 per cent per month, “Farmers were reticent in providing detailed information about moneylenders, but made generalised statements."30 (The media, too, confine themselves to describing the households of peasant suicides, but do not describe the households that drove them to suicide.) In fact, this silence of the victims speaks volumes of the actual domination exercised by moneylenders. The latter are able to recover their loans even without, in most cases, any legal document. Fear of moneylender is so great that the peasant may even commit suicide for fear of coercion and public humiliation; and even so his family avoids mentioning the name of the person who drove him to this act, and the police refrain from registering a case of abetment to suicide.
The NSS data nevertheless do reflect, in line with unofficial surveys, the inverse relation between size of landholding and dependence on moneylender credit. Marginal and small farmers are much more dependent on moneylenders and traders, and large farmers have correspondingly much greater access to bank credit (see Chart 8). It should be noted that the overwhelming majority of peasant suicides are of small or marginal farmers.
The two poorest sections, rural labourers and tenant farmers, have hardly any access to institutional (principally bank) credit, as they have no land to put up as collateral, and hence must rely very largely on moneylenders and other powerful sections.
Both the above facts – the scale of moneylender debt, and the greater dependence of small and marginal farmers on moneylenders, acquire particular gravity when we keep in mind the interest rates on such debt. NSS data indicate that loans from moneylenders, shopkeepers and traders were at rates of over 20 per cent, with a sizeable share at rates above 30 per cent.31 Other studies and surveys suggest that the reality is even bleaker. Interest rates on moneylender debt are reported to be 24-36 per cent per annum by two studies of A.P.32; the World Bank-NCAER survey put the interest rate at 48 per cent per annum. Given that the NSS 2013 Survey of Farmers puts the size of farmer debt at 61 per cent of annual income, such high rates of interest carry a grim significance. It should be noted that these are averages for all farmers, both indebted and not; for indebted farmers, the debt/income ratio would be higher; and for marginal and small farmers, who are more dependent on moneylenders, the ratio of interest payments to income would be even higher.According to the NSS Situation Assessment Survey for 2012-13, the net investment in productive assets per farmer household was a meagre Rs 6,156 per year, or 8 per cent of income. Moreover, even this low figure would not be funded out of income, as the annual savings per farmer household are much lower, at Rs 2,436. Investment would have to be funded out of debt. However, studies reveal that there is a sharp decline in the share of bank lending going to long-term agricultural loans.33
When State policy induces generalised agrarian distress, as during 1997-2003, or again during the last few years, peasants are forced to use cash loans to finance their basic consumption, and hence sink deeper in debt. The High Level Committee on Estimation of Savings and Investment pointed out that, in 2002-03, far from saving and investing, cultivator households were unable to meet their consumption expenditure from their earnings, and hence dissaved at the rate of 2.8 per cent of GDP. Cash loans to these households were 3.3 per cent of GDP in that year, “indicating thereby that the gap between income and consumption expenditure is financed by borrowings."34
The above facts indicate that usury is acting as a barrier to productive investment by the toiling peasantry. At the same, usury would seem to offer a more attractive outlet for deployment of surpluses than productive activities in either agriculture or industry.
There are strong obstacles preventing small and marginal farm households from obtaining bank credit. The World Bank-NCAER study reported that “clients often have to pay hefty bribes (ranging from 10 to 20 percent of the loan amount) to access loans. This makes the ultimate cost to borrowers very high (despite interest ‘caps’). It takes, on average, thirty-three weeks for a loan to be approved by a commercial bank.... banks demand collateral, which poor rural borrowers lack. Land remains the predominant form of collateral. But, poor households very often do not have clear titles to their land...”While one of the advantages of moneylender credit to the borrowers is that it generally does not require collateral, the study observed that “among those who report providing collateral for informal loans, the overwhelming collateral cited is ‘self labor’ – evidence of interlinked credit contracts spanning credit and labor. Almost all cases reporting self labor as collateral are landless/marginal farmers.” A field survey of rural debt in Punjab found that in 2014-15 80 per cent of agricultural labour households were indebted, with a debt per indebted household of Rs 68,330; 68 per cent of the debt was owed to ‘large farmers’, another 12 per cent to traders, shopkeepers and moneylenders, and only 8 per cent to banks/cooperatives. Interest rates on these borrowings were high (more than half was at annual rates of 22-28 per cent). Almost all this debt was taken for consumption purposes,35 indicating both that labour incomes were not enough to meet consumption needs, and that indebtedness would persist. Under these conditions it is highly unlikely that the large landowner who has extended a loan to the agricultural labourer would pay market wages for agricultural work. A recent study has brought out the reduction in bank credit to Dalit borrowers in the post-1991 period. It also shows a steep fall in the proportion of formal credit, particularly bank credit, in the debt portfolios of rural Dalits – a void filled by moneylenders at usurious rates of interest. In 1992, according to survey data, commercial banks were the largest source of debt for Dalit households; in 2002, they were replaced by moneylenders.36
As poor and marginal peasants are unable to make a living on their land alone, there is no clear dividing line between peasant and worker households. Hence the grip of usury in the villages can extend to urban workers as well, particularly the most oppressed sections. An important study of migrant labourers from western Orissa working in conditions of semi-slavery in the brick kilns of Telangana brings out the role of agrarian relations (disparities in land holdings, below-market prices for forest produce/agricultural produce, depressed local wages, collusion of various State agencies with exploitative interests, and networks of domination and coecion) in bringing about the debt-bondage of the brick kiln workers.37
During the 2000s, bank credit to agriculture has seemingly witnessed rapid growth, and the ratio of agricultural credit to agricultural GDP rose from 10 per cent in 1999-2000 to around 38 per cent by 2012-13.38 As Ramakumar and Chavan have shown, most of this growth did not take place in direct agricultural credit at all, but went to the corporate sector, with some convenient changes in the labeling of, and limits on, different types of loans. However, it appears likely that some of this hectic expansion also went to wealthy farmers, with the share of loans in the range Rs 2 lakh-10 lakh, within this, rising from 12.8 per cent in 2000 to 28.3 per cent in 2011.39
Large landowners remain dominant partiesAs in the case of credit, so too in other respects, large landowners are able to obtain relatively favourable terms, whereas small/marginal peasants have a weak bargaining position. As a result, “higher yields on small farms are, in most cases, not enough to compensate for the disadvantage of the small area of holdings – partly also due to high costs of production per unit. Therefore, the disparities in absolute incomes between various farm sizes are found to be very high and may have increased over time."40 The cleavage can be seen with respect to the markets for inputs, output, credit and labour.
(i) Owners of small holdings helpless at the hands of merchant capital:
(ii) Control of water resources related to control of land:Similarly, large farmers corner a larger share of water from irrigation projects: “marginal and small farmers are concentrated in marginal and degraded lands, lands which are at the tail-end of canal systems, or in the upper reaches of watersheds. They also suffer more from flooding and seepage than the land belonging to medium-large farmers. While large farmers capitalize on cheaper sources (e.g. higher percentage of irrigation from canals which is a cheaper irrigation option while smaller farmers have to rent water). About 40 per cent of the irrigated area in the case of farmers above 10 hectares was from canals, it was less than 25 per cent in the case of marginal and small farmers.”43 One of the reasons for the steadily growing gap between Irrigation Potential Created (IPC) and Irrigation Potential Utilised (IPU) may be that influential landowners have an interest in preventing canal water reaching a larger area. In the Eleventh Plan, the ratio of IPU to IPC has fallen to 29 per cent.44
Groundwater accounts for around 60 per cent of irrigation in India. While the bulk of wells are owned by small and marginal farmers, the bulk of deep tube wells are owned by medium and large farmers.45 A number of studies have argued that “inequality in landholding leads to inequity in access to groundwater, which, in turn, widens the skewedness in assets and income distribution."46 Groundwater is treated as the property of the landowner; hence the inequality in land carries over to the inequality in access to groundwater.A very revealing study of groundwater use in agriculture in Punjab47
brings out the following:
– The larger the landholding, the more and deeper the wells on that land, since large landowners are able to afford the necessary investment.
The above instance illustrates that the nature of the engagement with the market of different agrarian classes differs according to their initial resources (principally land), and hence their place in the local power structures:
The exercise of extra-economic power is a glaring reality of village life. The caste ties of large land owners (drawn largely from the dominant castes), their influence over Government officials and parliamentary parties, their access to criminal gangs, their cultural influence (for instance, their ties to religious figures/institutions/festivals), all contribute to their local exercise of power. This fact in turn shapes economic processes.
For this reason, resolution of the question of land and other rural assets is key to the democratisation of India’s social and political life. We can also see from the above instance the obstacles to addressing grave environmental questions such as the wanton depletion of groundwater resources without redistributing rural assets and reordering agrarian relations, and without the democratic organs of power peasants would forge in the course of this historic task.
Dalit and Adivasi peasants under the neoliberal regime
No doubt the rulers talk of Scheduled Castes and Tribes as ‘targets’ of sundry welfare schemes, but never in relation to agriculture as such: for to talk of them as peasants brings to the fore the land question, which is (instructively) taboo to ruling class discussion. It has taken a mass agitation by Dalits in Gujarat in recent months (demanding, among other things, five acres of land for every Dalit family) to draw attention once again to the connection between the oppression of Dalits and their exclusion from land. While the quantum of agricultural output by Dalits and Adivasis today from such land as they possess may not be large, their role in bringing about any future agrarian transformation is of critical significance.Eighty per cent of Dalits and 92 per cent of Adivasis live in the rural areas, and they are more dependent on agriculture than other communities. The NCEUS found that while 64 per cent of the Dalit workforce in 2004-05 was engaged in agriculture (compared to 58 per cent for all communities), a higher proportion of Dalits were landless than the members of any other community. Also, more than half the holdings of the Dalits were less than half a hectare.51 While Dalits constitute 21 per cent of households in rural India, their share of land under cultivation is only 9 per cent.52 This combination of dependence on agriculture and exclusion from land is particularly oppressive. In fact, the liberation of Dalits from caste oppression is inseparable from (though not reducible to) revolutionary land reform.53
In one sense, the land question among Adivasis is very different from that of the Dalits. Adivasis have larger holdings than Dalits, but their land is of the poorest quality. As a result, among various social sections, they have the highest proportion of casual labourers, as well as the highest official poverty ratios, followed by Dalits with respect to both casual labour and poverty levels.54 For Adivasis, underlying all the changes in their political, social and economic life is the loss of command over their forest and associated resources; it is this which has given rise to tribal movements. While in the pre-colonial period non-tribal rulers did encroach on the tribals’ control over the forests, it was colonial rule that systematically usurped the forests and termed the tribals encroachers, a process that culminated in the Indian Forest Act of 1927.
A recent study puts the figure of forest dwellers in India at 150 million, including almost 90 million tribals.55 For all the fanfare regarding the Forest Rights Act of 2006, as of July 2016, a total of 4.07 million individual claims have been filed; 3.69 million claims have been disposed of; 1.64 million titles have been distributed. That is, only 40 per cent of individual claims have so far been granted titles, with the remainder presumably rejected.56 As regards community forest, as mentioned earlier, the titles so far distributed cover only 1.2 per cent of the area of the land that falls in this category.57
On this base of colonial expropriation, and their consequent insecurity and lack of resources, the tribals have been prey to multiple depredations at the hands of exploiters. As the Planning Commission study Development Challenges in Extremist-Affected Areas (2008) notes, “Land alienation, forced evictions from land, and displacement also added to unrest. Failure to implement protective regulations in Scheduled Areas, absence of credit mechanism leading to dependence on money lenders and consequent loss of land and often even violence by the State functionaries added to the problem.” K. Balagopal narrates how, in the early 1990s, an executive order was issued, confined to West Godavari district of A.P., which asked the local revenue officers
Ravi Srivastava notes that
It is also on the basis of the colonial expropriation of the forest dwellers, and their current utter insecurity with regard to their title and control of their land and other resources, that the rulers are able today to simply evict them from those lands in the name of ‘development projects’ of one type or the other. That is to say, it is precisely the absence of secure land rights for the Adivasis that facilitates the rampant corporate annexation of land and other natural resources; and this process helps understand much of the present ‘growth’ process. A widely cited estimate of displacement for such projects is 60 million people for the period 1947-2004, including 7 million hectares of forest and 6 million hectares of other Common Property Resources. Despite constituting only 8 per cent of the country’s population, tribals accounted for 40 per cent of such displaced persons, i.e., 24 million persons. Only a third of these displaced persons have been re-settled.60
Thus, while the land relations prevailing in the forest areas are very different from the diverse conditions prevailing in the rest of the country, they have a certain common element: concretely, it is only in the course of asserting and establishing their sovereignty over their lands, rivers, forests, and all the wealth they contain that the forest dwellers can protect themselves against being displaced and tossed around like flotsam and jetsam in the name of ‘development’.
Women’s liberation and the land question
The proportion rises to a majority in forestry/plantation activities, and over three-fifths in animal husbandry. To quote the Planning Commission Sub-Group on Gender and Agriculture (2007),
However, land continues to be in the name of male members, with women by and large denied title to the land. Even if measures such as joint pattas were to be instituted by legislations or Government schemes, the actual implementation of these is unlikely to make much headway or have much meaning in the absence of a democratic organ of power to give it force. Women’s share in the ownership of land, an essential component of women’s overall liberation in Indian conditions, is only possible as part of a revolutionary land reform – as can be seen in the experience of the Chinese revolution.
As we have seen above, under the neoliberal regime, even simple reproduction has become a struggle for a large section of the peasantry, as is manifested in lakhs of peasant suicides. A growing share of the most deprived and oppressed rural households have lost the meagre lands they once had for cultivation. The poor peasantry is finding cultivation unviable, and is even forced to part with part of its land, but is unable to escape to other forms of viable employment.
At the same time, manufacturing employment remains an abysmally low 12 per cent of total employment; of this, the overwhelming bulk is in the informal sector, a refuge sector or dumping ground where incomes can be even lower than in agriculture. Thus the slowly growing landlessness is not accompanied by structural transformation of employment in the direction of an industrial economy.
In these circumstances of peasant helplessness, the indebtedness of peasants to usurious moneylenders, as we have seen above, has in fact steeply increased, as has their exploitation by merchant capital. All these have made it very difficult for them to retain any surplus to reinvest in production. These processes have additional dimensions in terms of different social strata, such as Dalits, Adivasis, and women.
In one sense, as we discussed in an earlier instalment, these conditions constrict the market for industrial goods. However, foreign investors and the Indian corporate sector do not view them as a constraint. Indeed, these conditions actually work in their favour to a large extent. Of course, a depressed agriculture provides them a cheap labour force, but that is not its only benefit. In the present conditions, corporate growth is being driven by the capture of land and various natural resources. In the view of the corporate sector, peasant immiserisation and insecurity will facilitate such land- and resource-grabs. It is another matter that, at many places, gritty resistance by the peasantry has upset their plans.
At the same time, as we have tried to indicate above, an effective resistance to neoliberal policies must be based in a struggle to change the existing agrarian relations themselves.
1. A rise in industrial growth would lead to greater demand for raw materials from agriculture. Increased industrial employment would lead to a rise in demand for food. If agriculture were unable to grow correspondingly, increased demand would lead to a surge in prices of agricultural raw materials and food, disrupting industrial growth. (back)
2. Planning Commission, Report of the Working Group on Land Relations for Formulation of the 11th Five-Year Plan, p. 28. (back)
3. S. Subramanian, D. Jeyaraj, “The Distribution of Household Wealth in India”, UNU-WIDER, 2006. (back)
4. Ibid. The share of land in total assets has risen sharply in the latest Debt and Investment Survey (NSS 70th Round, 2013), but this is because the land value has been estimated by a different method – i.e., not as reported by the informant, but according to certain norms/guidelines. (back)
5. Situation Assessment Survey of Agricultural Households, National Sample Survey (NSS), 70th Round. This cleavage is also borne out by findings of village surveys by the Project on Agrarian Relations in India. See V.K. Ramachandran, “The State of Agrarian Relations in India Today”, The Marxist, January-June 2011. (back)
6. National Sample Survey, 48th and 70th Rounds. (back)
7. Ministry of Agriculture, All India Report on Agricultural Census 2010-11, 2015. (back)
8. Vikas Rawal, “Ownership Holdings of Land in Rural India: Putting the Record Straight”, EPW, 8/3/2008. (back)
9. Peter Schran, The Development of Chinese Agriculture 1950-59, 1969, cited in John G. Gurley, China’s Economy and the Maoist Strategy, p. 239. (back)
10. Hamza Alavi, “India and the Colonial Mode of Production”, EPW, Special Number, August 1975. He cites the Report of the Indian Delegation to China on Agrarian Co-operatives, p 150, and Daniel Thorner, “Context for Cooperatives in Rural India”, Economic Weekly, 13th Annual Number, February 1962. (back)
11. Deepak Kumar, “Discrepancies in Data on Landholdings in Rural India: Aggregate and Distributional Implications”, RAS, January-June 2016. The NSS 2013 figure for total landholdings is 38 per cent less than the figure from the Agriculture Census 2010-11; it is 46 per cent less than the Land Use figure for agricultural land for 2013. (back)
12.Vikas Rawal, “Changes in the Distribution of Operational Landholdings in Rural India: A Study of National Sample Survey Data”, RAS. (back)
13. Rawal defines landless households as those who do not cultivate any land, while they may own some homestead land. The percentage of such households has risen from 38.7 per cent in 1987-88 to 49 per cent in 2011-12. The percentage of households principally dependent on self-employment in agriculture has fallen much less, from 37.7 per cent in 1987-88 to 34.3 per cent in 2011-12. (back)
14. NSS Report no. 452, January-June 1998. (back)
15. Cited in Beatriz Rodríguez-Labajos and Joan Martínez-Alier, “The Economics of Ecosystems and Biodiversity: Recent Instances for Debate”, Conservation and Society, 2013. (back)
16. Shankar Gopalakrishnan, Undemocratic and Arbitrary: Control, Regulation and Expropriation of India’s Forest and Common Lands, Society for Promotion of Wasteland Development & Rights and Resources Initiative, 2012. (back)
17. Ibid. (back)
18. Kanchan Chopra and Purnima Dasgupta, “Common Pool Resources and Development Process: Evidence from India”, http://dlc.dlib.indiana.edu/dlc/bitstream/handle/10535/1089/choprak270302.pdf?sequence=1 While one reason for the reduction in common lands may be the distribution of Government lands to the landless, reports indicate that the actual quantity so distributed is very small. (back)
19. P.S. Appu, Land Reforms in India, 1966. (back)
20. The lease agreement may or may not be written, and may or may not be registered; whatever the period of the lease, it shall not create an occupancy or protected tenancy or right against eviction or termination; the Government is barred from fixing the duration of the lease, or fixing the lease amount in fixed cash or kind or share of produce; the land owner shall be entitled to automatic resumption of the land on the expiry of the lease period; and so on. Disputes shall be adjudicated by the tehsildar or equivalent officer, and recourse to the civil courts is barred. (back)
21. R.V. Ramana Murthy, Rekha Misra, “Pricing of Paddy: A Case Study of Andhra Pradesh”, Study no. 38, Department of Economic and Policy Research, RBI. The study notes: “The reason for the high rents is that an increasing number of landowners who have left agriculture are holding the land for speculative purposes. The high proportion of landless agricultural labourers and marginal farmers in the region compete to lease-in the land among themselves resulting in a sharp increase in the rents in the region.... Marginal and (some) small farmers have remained in agriculture due to lack of alternate employment opportunities.... The rentier-middlemen class is able to extract a steady surplus from the agricultural labour population. This broad class formation, evident in Coastal Andhra from East Godavari to Nellore districts characterises the political economy of agrarian relations.” (back)
22. Report of the Commission on Farmers’ Welfare, Government of Andhra Pradesh, 2004. (back)
23. Ravi S. Srivastava, “Land Reforms, Employment and Poverty in India”, International Conference on Land, Poverty, Social Justice and Development, 2006. (back)
24. D. Bandyopadhyay, “Lost Opportunity in Bihar”, EPW, 21/11/2009. (back)
25. See S.P. Gothoskar, “On Some Estimates of Rural Indebtedness,” Reserve Bank of India Occasional Papers, December 1988, and K. Seeta Prabhu, A. Nadkarni, and C.V. Achuthan, “Rural Credit: Mystery of Missing Households,” Economic and Political Weekly, 10/12/1988. (back)
26. .H. S. Shergill report, Rural Credit and Indebtedness in Punjab, Institute for Development and Communication, 1998; Anita Gill, Lakhwinder Singh, “Farmers’ Suicides and Response of Public Policy”, Economic and Political Weekly, 30/6/06; N. Shyam Sundar, “Nature of Rural Credit Markets: An Investigation of Eight Villages in A.P.”, and R.S. Rao and M. Bharathi, “Comprehensive Study on Land and Poverty in Andhra Pradesh: A Preliminary Report”, 2003, cited in Report of the Commission on Farmers’ Welfare, Government of Andhra Pradesh, 2004; Report of the Farmers’ Commission of Experts on Agriculture in Andhra Pradesh, 2002; Priya Basu, Improving Access to Finance for India’s Poor, World Bank, 2006. (back)
27. Pallavi Chavan, “Debt of Rural Households in India: A Note on the All-India Debt and Investment Survey” , RAS, 2(1), 2012, compares the NSS data for rural household debt with estimates obtained from village surveys conducted by the Foundation for Agrarian Studies (FAS) in 2007 and 2008. It finds that, whereas the incidence of indebtedness in NSS was 20-30 per cent for most states, the FAS surveys showed incidence of between 50 and 75 per cent. However, it does not provide a break-up of this between institutional and non-institutional debt. Chavan’s study also indicates that even institutional debt is underestimated by the NSS. Similarly, a recent survey estimated total farm debt in Punjab at Rs 69,335 crore for December 2013 (Sarbjit Dhaliwal, “Farmers’ debt rises to Rs 69,335 core: Survey”, Tribune, 23/1/2016) whereas the NSS data of 2013 suggest a much lower figure of Rs 16,845 crore for the state. All these indicate that NSS data greatly underestimate farm debt. (back)
28. Rakesh Mohan, “Economic Growth, Financial Deepening and Financial Inclusion”, RBI Bulletin, November 2006. (back)
29. Task Force on Credit Related Issues of Farmers, Ministry of Agriculture, 2010, pp. 51-53. (back)
30. Ibid., p. 32. (back)
31. All India Debt and Investment Survey, NSS 70th Round. (back)
32. Cited in Report of the Commission on Farmers’ Welfare, Government of Andhra Pradesh, 2004. (back)
33. R. Ramakumar and Pallavi Chavan, “Bank Credit to Agriculture in India in the 2000s: Dissecting the Revival”, Review of Agrarian Studies, 2014. (back)
34. Report of the High Level Committee on Estimation of Saving and Investment, Ministry of Statistics and Programme Implementation, 2009, pp. 264-65. Although the level of dissaving may have been particularly high in 2002-03 because of the failure of the monsoon, even in 2012-13 the bulk of agricultural households continued to dissave (NSS 70th Round). (back)
35. Gian Singh, Anupama, Gurinder Kaur, Rupinder Kaur, Sukhvir Kaur, “Indebtedness among Farmers and Agricultural Labourers in Rural Punjab”, EPW, 11/2/2017. (back)
36. Pallavi Chavan, “The Access of Dalit Borrowers in India’s Rural Areas to Bank Credit”, Review of Agrarian Studies, vol. 2, no. 2, 2012. (back)
37. Tathagatha Sengupta and G. Vijay, “A Survey of Migration from Western Orissa to Telangana”, Report submitted to S.R. Sankaran Chair (Rural Labour), NIRD, Hyderabad, 2015. https://www.researchgate.net/publication/277502833_A_Survey_of_Migration_from_Western_Odisha_to_Brick_Kilns_in_Telangana (back)
38. Economic Survey 2015-16, vol. II, p. 110. (back)
39. Ramakumar and Chavan, op. cit. (back)
40. National Commission for Enterprises in the Unorganised Sector (NCEUS), “A Special Programme for Marginal and Small Farmers”, 2008. (back)
41. NCEUS, op. cit.. According to the NSS 59th Round, small farms on the average produce more (in value terms) per hectare than large farms for the country as a whole, although this does not hold for certain states. (back)
42. Economic Survey 2015-16, vol. I, pp. 133-4. (back)
43. NCEUS, op. cit.. (back)
44. Economic Survey 2015-16, vol. II, p. 104. (back)
45. V.P. Gandhi and V. Bhamoriya, “Groundwater Irrigation in India: Growth, Challenges, and Risks”, India Infrastructure Report 2011. (back)
46. Anindita Sarkar, “Socio-economic Implications of Depleting Groundwater Resource in Punjab: A Comparative Analysis of Different Irrigation Systems”, EPW, 12/2/2011. This is based on the same author’s “Structural Changes in Irrigation Systems and Access to Groundwater Resources: A Case Study of Punjab”, PhD thesis, 2009, available at http://shodhganga.inflibnet.ac.in/handle/10603/18164. See also Bela Bhatia, “Lush Fields and Parched Throats: Political Economy of Groundwater in Gujarat”, EPW, 1992; N. Nagraj and M.G. Chandrakanth, “Intra and Inter Generational Equity Effects of Irrigation Well Failures” , EPW, 1997. (back)
47. Anindita Sarkar, op. cit. (back)
48. Similarly, a study of three villages in Andhra Pradesh finds that the cost of groundwater depletion is borne disproportionately by marginal and small farmers, and speculates that the higher costs may be responsible for pushing these farmers into a debt trap. V. Ratna Reddy, “Costs of Resource Degradation Externalities: A Study of Groundwater Depletion in Andhra Pradesh”, Centre for Economic and Social Studies, Hyderabad, 2003. (back)
49. K. Bharadwaj, “Notes on Farm Size and Productivity”, EPW, Review of Agriculture, March 1974. (back)
50. In fact, wages account for 58 per cent of the income of farmer households with up to 0.4 hectare (one acre), and 38 per cent of the income of farmer households with 0.4 to 1 hectare. (back)
51. National Commission for Enterprises in the Unorganised Sector, “A Special Programme for Small and Marginal Farmers”, November 2008. (back)
52. Rawal, “Ownership of Holdings”, op. cit. (back)
53. How the institution of caste serves as a serious obstacle for the class consciousness of other castes can be seen from the example of the Maratha community. The top rung of the Maratha community is a major part of the ruling class of Maharashtra. (According to one study, over 75 per cent of the land in the state is held by Marathas; they control over 71 per cent of cooperative institutions, 86 of 105 sugar factories, and 54 per cent of the educational institutions. From 1962 to 2004, 55 per cent of the 2430 MLAs elected were Marathas. Twelve of the 17 Chief Ministers since 1962 have been Marathas. ) However, as the dominant caste among peasantry, numbering an estimated 30 per cent of the population, its vast ranks of poor peasants have been victims of the agrarian crisis as well as the general crisis of employment. Rather than find expression in a class-based agrarian movement, however, this discontent has been shaped into a movement to demand the provision of reservations to Marathas and the scrapping of the Prevention of Atrocities Act. (back)
54. NCEUS, op. cit. (back)
55. Rights and Resources Initiative, Vasundhara, Natural Resources Management Consultants, Potential for Recognition of Community Forest Resource Rights Under India’s Forest Rights Act: A Preliminary Assessment, July 2015. (back)
56. Ministry of Tribal Affairs, Status report on implementation of the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006, for period ending July 31, 2016. (back)
57. Gopalakrishnan, op.cit.; also, Rights and Resources Initiative, op. cit. (back)
58. K. Balagopal, “Illegal Acquisition in the Tribal Areas”, EPW, 6/10/2007. (back)
59. Srivastava, op cit. (back)
60. Walter Fernandes, “The Human Cost of Development - Induced Displacement”, in India Social Development Report, 2008, cited in Development Challenges in the Extremist-Affected Areas: Report of an Expert Group to Planning Commission, Planning Commission, 2008, p. 15. Another 20 per cent of displaced persons were Dalits, and 20 per cent were of Other Backward Classes (OBCs). (back)
61. NCEUS, op. cit. (back)
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