Farmers' Indebtedness and Agrarian Crisis in India

Indian agriculture is suffering due to low capital formation, inadequate expenditure on irrigation and extension services and a dearth of cheap and inaccessible credit. All these have led to the problem of agrarian crisis which is evident from recurrent suicides by farmers in the country.

In this backdrop, the book examines magnitude and factors of indebtedness among farmers of Telangana State. It identifies the sources of credit and for what purposes the loans are utilized by the farmers. The book is the outcome of survey undertaken in Medak district during 2015-16, which is listed as one of the distressed districts in Telangana. The survey results showed that 25 per cent of farmers are indebted and incidence is the highest among marginal and small farmers. Farmers have obtained about 69 per cent of loans from informal sources and ‘moneylenders’ were found to be the most preferred source of credit, followed by ‘Relatives and friends’.

The major factors that contribute to indebtedness are principal occupation, use of modern technology, rate of interest, medical expenditure, and source of loan. The incidence of debt is higher among the farmers who have principal source of income as agriculture than those who have other sources of income. Crop failure has been cited as one of the major reasons for failure of repayment of loans. The survey revealed that there is an inverse correlation between use of modern technology and incidence of indebtedness. Therefore, any policy towards improvement of lives of farmers must be directed towards the process of income generation and its fair distribution so that it largely benefits small and marginal farmers.  

About the Author

Subhendu Dutta (b. 1969) is an Associate Professor in the Department of Economics, ICFAI Business School Hyderabad. He is a recipient of gold medal for academic excellence at Masters in Economics. Dr. Dutta obtained his PhD for his work in the area of rural credit and indebtedness from Assam Central University in 2009. He has been teaching economics for the last nineteen years and his teaching interests include managerial economics, macroeconomics and business environment and agricultural economics. His research areas include rural credit, poverty, micro finance, and economic development. He has presented papers in both national and international conferences and has two books and a number of research publications to his credit, both in national and international journals.

C.S. Shylajan (b. 1970) is Professor and Dean Academics at IBS Hyderabad. He has more than 20 years of research and teaching experience. He did his PhD in Economics at Madras School of Economics, Chennai. Before joining IBS Hyderabad, he was with IIM Calcutta as Post Doctoral Fellow. He was also a Visiting Research Fellow at ICTP, Italy as part of a Research Programme sponsored by UNESCO and Beijer Institute, Sweden. His research areas are international economics, macroeconomics, environmental economics, etc. He has authored a book and published research papers in national and international journals of repute. He was the Consulting Editor of IUP Journal of Public Finance during 2006-2012. He is currently Associate Editor of International Journal of Ecology and Development. He is life member of Indian Economic Association, The Indian Econometric Society and Telangana Economic Association.