Rural distress

Rural distress

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According to Agriculture–Pathways to Prosperity in Asia and the Pacific, March 2011,   

•    Intensity of multidimensional poverty (MPI) is highest in South Asia, which houses 29.5 percent of global population, but has 51 per cent of the world’s multi-dimensionally poor. India, Bangladesh, Nepal and Pakistan have high MPIs in South Asia. 51 per cent of the population in Pakistan, 58 per cent in Bangladesh, 55 per cent in India, and 65 per cent of population in Nepal are MPI poor.

•    Living standard has the highest contribution to poverty in India, Bangladesh and Nepal. Deprivation rates in health parameters are high in Pakistan and Nepal. Deprivation in terms of nutrition is high in Nepal and India. China has only 13 per cent of the population that is MPI poor, while Thailand has only 0.8 per cent. India, Afghanistan and Bangladesh have close to 50 per cent of rural children who are undernourished.

•    More than 680 million people in the Asia-Pacific region still continues to live on less than $1.25 a day, and 70 per cent of them reside in Bangladesh, India, Nepal and Pakistan. Most of the poor from this region are either landless or own a limited piece of land, possess large families, are less educated and have limited access to credit and technology.

•    In India, a study by Gaiha and Imai (2007) based on the analysis of the 61st NSS Round (2004-05) shows both higher incidence and intensity of poverty among the marginalised groups including Scheduled Castes and Scheduled Tribes. While the overall incidence of poverty in rural India was about 25 per cent, among the STs and SCs, about 44 per cent and 32 per cent, respectively, of the households were poor. The incidence of poverty among others was 19 percent. The causes behind this phenomenon are: poor quality of education, remote locations, limited access to markets and lack of decent physical and social infrastructure.

•    In 2005, the total number of people living in extreme poverty, defined as those living on less than US$1.25/day (2005 PPP) was 1.4 billion in the world. Of these, approximately 1 billion, i.e. about 70 per cent live in rural areas.

•    The number of rural poor has declined rapidly in Asia and the Pacific Region over the past decade (from 1057 million to 687 million).

•    While East Asia had over 500 million rural poor two decades ago, the number today stands at only 117 million.

•    The incidence of rural poverty has declined from 59 per cent to 31 per cent in the last two decades for the Asia and the Pacific region as a whole.

•    While in East Asia, poverty as a share of rural population is close to 15 per cent, in South Asia over 45 per cent of the rural people are poor.

•    In East Asia the rural poverty incidence declined from over 63 per cent to 15 per cent over the past two decades. Similarly, in South East Asia the incidence of rural poverty declined from 52 per cent to about 26 per cent in the last two decades.

•    Sri Lanka, Indonesia, Vietnam, Bangladesh, Lao PDR and China have made significant progress in reducing hunger. Slower progress has been made by India, Pakistan, the Philippines and Nepal.

•    In India, over 300,000 children work in the carpet industry, many of them under conditions that amount to bonded labour.

•    Smallholders in India who operate/ own less than 2 hectares accounted for about 71 per cent of the rural households in 1993 and about 88 per cent in 2004 indicating increased land fragmentation. Nearly, 25.3 percent of the rural households in India were chronically poor during the period 1971-1982. The NCAER study shows that 30.0 percent of the rural households in India were chronically poor during the period 1969-71.

•    The average holding size is 0.5 hectare for Bangladesh, 0.8 hectare for Nepal and Sri Lanka, 1.4 hectares for India and 3 hectares for Pakistan.

•    Almost 70 percent of poor live in rural areas of Asia and they depend on agriculture for their livelihood. In South Asia, about 80 per cent of the poverty remains a rural problem despite rapid industrialization and economic growth.

•    Some of the shocks that erode poor people's assets and capabilities are: natural disasters, climate change, pest outbreaks (e.g. avian influenza), vulnerability to food price fluctuations, illness, and death. Some of the risk-coping mechanisms households usually undertake in the face of poverty are selling productive assets, borrowing, depleting savings, migrating, and reducing expenditure on food, healthcare and education (notably affecting women and children).

•    There exist gender inequalities in education, economic opportunities, wages and nature and extent of work. A study in West Bengal (as mentioned by the IFAD report) shows that among women who had taken loans for income-generating activities, only 5 per cent reported having total autonomous control over the money; 56 per cent reported that they share control over the loan money with their husbands; and 38 per cent reported that their husbands have sole control over the proceeds of the loan.

•    Women’s share in non-agricultural wage employment remains low, particularly in South Asia. For India, it is estimated that 55 per cent of the wage gap between men and women cannot be explained by productivity and endowments, which suggests the presence of systematic gender-based discrimination in pay.

•    The decline in the proportion of people living in rural areas between the period 2000-04 and 2005-09 has been more prominent in East Asia and South East Asia as compared to Central Asia and South Asia.

•    Rural population in Asia and the Pacific region is likely to peak in 2014, with the total numbering 2400 million, which would decline thereafter. The contribution of agricultural value added to GDP is low in the entire region, and declined marginally between 2000-04 and 2005-09 for South East Asia and Pacific Island, and, more significantly in East, South and Central Asia.

•    South Asia (31 percent) has seen lowest growth in per capita income between 2000-04 and 2005-09 as compared to East Asia (64 percent) and Central Asia (43 percent).

•    The effect of rise in food prices on GDP between 2006 and 2007-08 is considerable as a 50 per cent rise in food price decreases the GDP of Asia and the Pacific Region by 1.05 per cent. A combined shock of a 60 per cent rise in food and fuel prices decreases GDP by 1.41 per cent.   

•    Usage of ICTs helped farmers in terms of knowing prices of agricultural commodities or weather conditions for e.g. SEWA (India) performs this service for women and ITC’s e-choupal (India) uses SMS to inform small producers.

•    In India, the number of self-help groups linked to banks has increased from about 500 in the early 1990s to more than 3 million in 2008. The Indian Dairy Cooperatives network comprises 12 million members, including landless labourers and women, and produces 22 per cent of India’s milk supply. In order to increase the welfare of migrants, Rajasthan introduced mobile ration cards for its them, while Orissa and Madhya Pradesh introduced improvements in the safety and efficiency of remittances.

•    Diversification of agriculture into livestock and aquaculture has added to increased prosperity and food security in China, Vietnam, Sri Lanka, Laos and Philippines. It finds that the linkage between agricultural (rural) and industry (mainly around urban centres) remained weak in major South Asian countries except China and Vietnam. In India during the process of economic transition, not enough movement of labour took place from agriculture to industry.

•    On average, rural non-farm income (RNFY) constitutes roughly 50 per cent of rural household income in Asia and the Pacific Region, of which 40 per cent comes from local non-farm business and employment and the remaining from transfers and remittances. Due to paucity of human, financial and physical capital, the poor households often remain confined to the low-productivity non-farm activities, which trap them in poverty.

•    Gender, caste and social status determine one's participation in non-farm jobs. Evidence suggests that each dollar of additional value added in agriculture generates USD 0.6 to USD 0.8 of additional rural nonfarm economy’s income in Asia and the Pacific Region.

•    Based on state level time series data for India covering the period 1971-72 to 1983-84, it has been found that expansion of casual non-farm employment is strongly correlated with growth in agricultural wages.

•    IFPRI estimates that 87 per cent of the world’s small farms (those less than 2 hectares) are in Asia and the Pacific Region. Secured land rights and women having joint ownership of land can increase productive investment in agriculture.

•    There are over one billion youth in the world today. Eighty five per cent of them live in the developing world. Some 61.5 per cent live in Asia and the Pacific.

•    There has been a fall or slowing down of growth in monthly wage rates in most countries of Asia and the Pacific region including India during 2006-2009.

•    Sectoral composition of rural non farm economy indicates that rural non-farm employment is almost equally distributed between manufacturing (27 per cent), trade and transport (29 per cent) and financial and personal services (31 per cent) in Asia and the Pacific Region. In India, while the ratio of non-farm to agricultural income is 4.5 to 1 for the average household, for the poor it is only 0.75 to 1.

•    A 1 per cent growth in agricultural value added per capita results in a GDP (per capita) growth rate of 2.13 per cent.

•    South Asia (or South East Asia) would need only a 5 per cent (or 8 per cent) increase in annual growth rate of agricultural ODA, 2 per cent (or 4 per cent) increase in annual growth rate of agricultural expenditure, 3 per cent (or 4 per cent) increase in annual growth rate of fertilizer, or 2 per cent (or 3 per cent) increase in annual agricultural investment in 2007-13 over and above the baseline scenario to achieve MDG 1, at US$2 a day, by 2015.

•    On the basis of simulations the IFAD report finds that the Asia and Pacific region would require a 56 per cent increase in agricultural ODA, a 28 per cent increase in agricultural expenditure, a 23 per cent increase in fertilizer use, or a 24 per cent increase in agricultural investment during 2007-13 in order to achieve the MDG 1 (at US$2 poverty line). It suggests that investment in agriculture is the key to poverty alleviation.

•    For Asia and the Pacific region, the elasticity of the head-count ratio of poverty with respect to agricultural growth is -1.18 (at $2 a day poverty line) and -2.73 (at $1.25 a day poverty line). Government can play a pivotal role in organizing the smallholders (who face several challenges, such as high transaction costs in accessing inputs, credit and marketing facilities) so that they participate in supply chain/ supermarkets.

•    The world population is expected to be about 9.1 billion in 2050. With increasing urbanization and high income levels, food production must increase by 70 per cent to meet the food demand in 2050. Since the scope for net increase in arable land is highly limited (especially in Asia and the Pacific Region), 90 per cent of this additional food requirement has to be met through increases in yields in areas with intensive agriculture.

•    More than half the deaths caused by natural disasters in 1985-94 were concentrated in South Asia. From 1995-2004, the share of East Asia and the Pacific in the total number of deaths rose to 59 per cent while the share of South Asia dropped to about 20 per cent.


According to National Commission for Enterprises in the Unorganised Sector--NCEUS (2007), Report on Conditions of Work and Promotion of Livelihoods in the Unorganised Sector,

• The National Agricultural Policy of 2000 observed "Agriculture has become a relatively unrewarding profession due to generally unfavourable price regime and low value addition, causing abandoning of farming and increasing migration from rural areas….". Several factors contribute to this situation. These include shift in cropping pattern towards cash crops, lack of level playing field for farmers in the global market, increased dependence on high-cost inputs which increases the cost of cultivation and indebtedness, enhanced risks, falling profitability and declining public support.

• When 92 per cent of the country's workforce is employed in the informal or unorganised economy (i.e. those who work in the unorganised sector plus the informal workers in the organised sector), it is but natural that there is a high congruence between the poor and the vulnerable segments of the society (who may be called the common people).

• Poor asset base and landlessness are the prime reasons why workers in rural areas work as agricultural labourers. The share of landlessness among the agricultural labourers was 19.7 per cent in 2004-05.

• About 86 per cent of the marginal and small farmers operate around 43 per cent of the agricultural land while 14 per cent of medium and large farmers operate around 37 percent of the land.

• Nearly 40 per cent of the Hindu STs engaged as agricultural labourers are below the poverty line, followed by Muslim agricultural labourers at 31.5 per cent, and SC Hindus at 31 per cent.

• Landlessness is the highest among Hindu SCs and Muslim OBCs and Others and the least among Hindu upper castes.

• 79 per cent of the informal or unorganised workers, 88 per cent of the Scheduled Castes and Scheduled Tribes, 80 per cent of the OBC population and 84 per cent of the Muslims belong to the poor and vulnerable group. They have remained poor at a bare subsistence level without any job or social security, working in the most miserable, unhygienic and unliveable conditions, throughout this period of high economic growth since the early nineties.


According to Nagaraj K (2008): Farmers’ Suicides in India, Magnitudes, Trends and Spatial Patterns, 

• The Situation Assessment Survey of Farmers of the National Sample Survey reported that as many as 40 percent of the farmers did not like farming and  ‘were of the opinion that, given a choice, they would take up some other career’ (National Sample Survey, 2005; p11); 27 percent found it ‘not profitable’, another 8 percent reported that it is ‘risky’ and another 5 percent did not like it for ‘other reasons’

• Farmers' suicides happened in Maharashtra, Karnataka, Kerala, Andhra Pradesh, Punjab and Madhya Pradesh including Chattisgarh

• In the ten-year period between 1997 and 2006 as many as 166,304 farmers committed suicide in India. If we consider the 12 year period from 1995 to 2006 the figure is close to 2,00,000: the exact figure (190,753) would be an underestimation since a couple of major states like Tamil Nadu and Rajasthan and a number of smaller states like Pondicherry did not report any farmers’ suicides for one or the other – or both - of these two years. 

• Going by the official data, on average nearly 16,000 farmers committed suicide every year over the last decade or so.  It is also clear from the table that every seventh suicide in the country was a farm suicide. 

• The year 1998 in fact show a sharp increase in the number of farm suicides – an 18 percent jump from the previous year; and the number remained more or less steady at around 16,000 suicides per year over the next three years upto 2001.

• The average number of farm suicides per year in the five year period 2002-2006, at 17,513 is substantially higher than the average (of 15,747 per year) for the previous five year period.  Farm suicides have increased at annual compound growth rate of around 2.5 per cent per annum over the period 1997-2006

• Suicides in general, among the population as a whole, are also largely concentrated among males, but the degree of concentration here is significantly lower than in the case of farm suicides: male suicides in the general population account for nearly 62 percent of all suicides in the country.

• The farm suicide rate (suicide rate in the country is defined as number of suicides per 100,000 population) in the country in 2001 was 12.9, which was about one fifth higher than the general suicide, which was 10.6 in that year. As one would expect, the suicide rate among male farmers was much higher at 16.2, which was nearly two and a half times the rate for the female farmers (which was 6.2).

• The overall farm suicide rate in 2001 at 15.8 is around 50 percent higher than the general suicide rate in the country in that year. And for the male farmers this rate, at 17.7, is significantly higher, by about 75 per cent, compared to the females.



According to Some Aspects of Farming, 2003, Situation Assessment Survey of Farmers, National Sample Survey (NSS) 59th Round, (January–December 2003):


• An estimated 27% of farmers did not like farming because it was not profitable. In all, 40% felt that, given a choice, they would take up some other career.  The break-up of members of farmer households by educational level was very similar to that of the entire rural population. 

• Nearly 5% of farmer households had a member who belonged to a self-help group. Only 2% had a member who belonged to a registered farmers’ organisation.  

• About 18% of farmer households knew what bio-fertilisers were and 29% understood what minimum support price meant. Only 8% had heard of the World Trade Organisation.  Only 4% of farmer households had ever insured their crops and 57% did not know that crops could be insured. About 29% of farmer households included a member of a cooperative society. 

• Only 19% had availed themselves of services from a cooperative. Most of these households availed themselves of either credit facilities, or services related to seeds or fertilisers.   

• Almost 48% of farmer households purchased their seeds and 47% used farm-saved seeds. Whereas 30% farmers replaced seed varieties every year, another 32% replaced them every alternate year. Fertilisers were used by 76% farmer households during the kharif and 54% during the rabi season.  

• For 27% households, fertilisers were available within the village. Organic manure was used by 56% farmer households during the kharif and 38% during the rabi season. It was available within the village for 68% households during the kharif and 75% households during the rabi season.  

• Improved seeds were used by 46% farmer households during the kharif and 34% during the rabi season. They were available within the village for 18% farmer households.  

• Pesticides were used by 46% farmer households during kharif and 31% during rabi. Veterinary services were used by 30% during kharif and 22% during rabi. Only 1.5-2% of farmer households said facilities for testing of fertilisers or pesticides were available to them.

• Among the various agricultural activities covered in the survey, 96.2% of all land used for farming during the kharif and 95.1% during the rabi season was devoted to cultivation, including horticulture, sericulture and vermiculture. In case of leased-in land, 98.2% during the kharif and 97% during the rabi season was cultivated.  

• The share of orchards and plantations in total farmed land was 3% during the kharif and 4% during the rabi season.  In land farmed by Scheduled Caste households, the share of orchards and plantations was 1-2%.

• Farmer households possessing less than 0.01 hectares of land - who devoted only 14% of farmed land to cultivation - reported 69% of farmed land as used for dairying, compared to 0.35% for all farmer households taken together. 

• Almost 50% of all land irrigated during the kharif season and 60% during the rabi season was irrigated by tube-wells. Wells were used to irrigate 19% of 1and during kharif and 16% during rabi. Canals accounted for irrigation of 18% land during kharif and 14% during rabi. 

• An estimated 62% of net irrigated area during kharif and 69% during rabi was devoted to cultivation of cereal crops. Gross irrigated area accounted for 42% of cropped area during the kharif and 56%during the rabi season. About 79% of gross irrigated area during the kharif and 83% during the rabi season was irrigated without the use of any device. Around 5% was irrigated with the help of diesel pumps and 4% with electric pumps. 

• Of the farmer households using non-human energy for ploughing, about 47% used diesel tractors while 52% relied on animal power. Among those using non-human energy for harvesting, 59% used diesel-powered machines. Of those reporting non-human energy use for irrigation, 66% used diesel pumps and 33% used electric pumps.

The Mid-Term Appraisal (MTA) for the Tenth Five Year Plan had drawn attention to the loss of dynamism in agriculture and allied sectors after the mid-1990s. In fact, during the last decade or so Indian agriculture has faced a number of severe challenges, superimposed on the long-term demographics. According to the 11th Five year Plan,
, recent trends that have raised concern regarding food security, farmers’ income, and poverty are:


  • Slowdown in growth.
  • Widening economic disparities between irrigated and rain-fed areas.
  • Increased vulnerability to world commodity price volatility following trade liberalization. This had an adverse effect on agricultural economies of regions growing crops such as cotton and oilseeds.
  • Uneven and slow development of technology.
  • Inefficient use of available technology and inputs.
  • Lack of adequate incentives and appropriate institutions.
  • Degradation of natural resource base.
  • Rapid and widespread decline in groundwater table, with particularly adverse impact on small and marginal farmers.
  • Increased non-agricultural demand for land and water as a result of the higher overall GDP growth and urbanization.
  • Aggravation in social distress as a cumulative impact of the above, reflected in an upsurge in Growth of agricultural GDP decelerated from over  3.5% per year during 1981–82 and 1996–97 to only  around 2% during 1997–98 and 2004–05 . This deceleration, although most marked in rainfed areas, occurred in almost all States and covered almost all major sub-sectors, including those such as horticulture, livestock, and fisheries where growth was expected to be high
  • Consequently, growth of agricultural GDP has been well below the  target of 4% set in both Ninth and Tenth Plans. In fact, Tenth Plan growth averaged even less than that during Ninth Plan because, as was noted in the MTA, growth  plummeted to below 1% during its first three years, that is from 2002–03 to 2004–05.
  • The supply side performance of agriculture is affected by a large number of factors, several of which interact among each other. These factors are the natural resource base (including rainfall), technology, infrastructure (including irrigation), and the economic environment comprising price signals and institutions
  • An important reason for recent farm distress was that after improving steadily from 1980 to 1997, terms of trade (
    ) turned against agriculture from 1999 and, almost for the first time in post-Independent India, farm prices actually fell at the same time that farm production decelerated.
  • This not only depressed incomes, but also increased farm debt considerably. More generally, farmers are now subject to greater risk because variability of world prices is much higher than what Indian farmers have been used to in the past.
  • Another important development of market institutions is the rise of modern food retailing which offers the prospect of lower marketing costs and reduced spoilage leading to lower prices for consumers and higher realization for farmers. Modern retailing has become controversial partly because those involved in existing trading mechanisms feel their vested interests threatened. However, although there is room for mutually beneficial modernization in this area and this will undoubtedly evolve, a legitimate area of concern is that if front-end investment outpaces the backward linkage with farmers, the immediate outcome may simply be higher imports and lower farm prices
  • An unfortunate trend over the past two decades has been that expenditure control efforts following fiscal shocks such as the Pay Commissions awards have led to cutbacks in agricultural investment and extension, but not in subsidies. Budgetary subsidies to agriculture have increased from around 3% of agriculture GDP in 1976–80 to about 7% in 2001–03. During the same period, public investment in agriculture declined from over 4% of agriculture GDP to 2%. Most of the subsidies are on fertilizer, power, and irrigation water and these have actually contributed to the degradation of natural resources.

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