The Structural Adjustment Programme (SAP) of liberalizing the Indian Economy was undertaken in 1991 as per the directives of International Monetary Fund and World Trade Organisation. Major reforms were introduced in the real and financial sectors of the economy with a view to increase its efficiency and profitability. Trade was also liberalized ; the import and customs duties of many products were drastically reduced or abolished completely. Removal of all restrictions on imports lead to a steep fall in their domestic prices rendering them unprofitable for production. The government started disinvesting in agriculture and the industrial sector allowing the private sector to take over. The government reduced different types of subsidies to agriculture which increased the production cost of cultivation. This lead to the agrarian crisis as it had an adverse impact on the agricultural sector.
Several million hectares of food-growing land were converted to exportable crops leading to fall in foodgrains output. India being self- sufficient, started exporting wheat and rice. But the rate of growth of the GDP in agriculture and allied sectors was just one per cent per annum during the year 2002-05. As a result, per capita availability of foodgrains decreased; the growth rate of population became higher than that of foodgrains. Moreover trade liberalisation with a thrust on exports has been inconducive to Indian markets causing a steep fall in prices of farm goods. As prices fell for Indian producers of export crops, their access to low-cost credit was also reduced under financial sector reforms.
Lending facilities and concessions of banks were removed during the post-reform period and this accelerated the crisis in agriculture. Farmers were unable to pay back loans with high interest and also resorted to borrowing from unorganized elements such as moneylenders , thus falling into the debt trap. Farmers did not benefit even with contract farming and their exposure to steeply falling global food prices plunged them into spiralling farm debt pushing them to commit suicide.
The restructuring of the public distribution system , through the creation of two groups – Below Poverty Line (BPL) and Above Poverty Line (APL), continuously increased their prices through ration shops , affecting the availability of food grains to the poor at subsidised rates. As a result, even the poor people did not buy the subsidised foodgrains and it got accumulated in godowns to be spoiled or sold in the open market.
The increased grain exports have been at the cost of hunger and starvation as millions of rural labourers and farmers have suffered job loss and income decline. Rising unemployment, rising input and credit costs for farmers and exposure to global price declines are responsible for the low absorption of food grains in India.
Increase in the instance of farmers’ suicides has been a major fall- out of stagnation in agriculture. Monopolisation of HYV seeds, shift in farming from chemical farming to organic farming, global competition is killing our farmers literally. Since agriculture is not drawing remunerative income, farmers have become desperate, turning to suicide as an escape from the debt trap. More than five thousand indebted cotton farmers, have committed suicide in Andhra Pradesh since 1998. Punjab and Maharashtra ( Vidarbha) are not far behind in numbers. This is a grave issue which requires urgent and continuing attention of the government and society.
Contract farming has lead to a direct onslaught on peasant land and water resources by the corporates. Restrictions on landownership by non-cultivators have been removed and ceilings on landholdings rolled back in many states to aid large business corporations in purchase of agricultural land. Farmers are giving up land to solve their debt crises but are unable to overcome their food problems. Unemployment in the agricultural sector has in fact increased during the reform period.
Under the Special Economic Zones Act of 2005, land has been taken over by the government for commercial and industrial purposes. Most of the acquired land is fertile for non-agricultural purposes. Corporate bigwigs like Reliance, TATA have faced public protests over their acquisition of land such as Nandigram agitation in West Bengal. SEZ were introduced to promote export and industrial growth in line with globalisation but have resulted in exploitation of farmers taking away their means of livelihood and directing land towards business and manufacture.