Rural distress

Rural distress

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According to the World Development Report: Agriculture for Development 2008,


• Diversification of Indian agriculture towards high-value crops such as horticulture and floriculture is needed so as to promote income-generation among the small and marginal farmers. Markets for higher value products such as horticulture are growing at 6 percent a year in India. Horticulture, livestock, and other high-value activities offer considerable potential for employment generation and productivity growth.

• Tenancy restrictions in India reduce productivity and equity. Lack of efficient land markets in China or and restrictions on land rental in India inhibited labor mobility. Land rental activity in India has declined sharply, from 26 percent in 1971 to less than 12 percent in 2001, contrary to trends in other countries. However, renting continues to be an important means of accessing land. More number of households rented land in 2001 than the total number that benefited from land reforms Land sales and purchases contributed more than land reform to equalize India’s land ownership.

• The average landholding size went down from 2.6 hectares in 1960 to 1.4 hectares in 2000, and it is still declining in India.

• Adoption of new technologies, especially information and communication technologies—ICTs (e-government), can reduce the scope for corruption, as with computerizing land records in Karnataka.

• In Punjab, extensive use of nitrogen fertilizer and pesticides has increased concentration of nitrates and pesticide residues in water, food, and feed, often above tolerance limits. Therefore, it is justified to adopt more diversified systems that can reduce the need for chemical fertilizers and pesticides (for example, mixed legume-cereal systems). Power, fertilizer, and output subsidies, which are provided to appease large farmers, discourage a shift to alternative cropping patterns. In the Punjab region, overexploitation of groundwater takes place thanks to the huge subsidies given on electricity. Moreover, minimum support prices (MSP) for rice increase the financial attractiveness of rice relative to less water-intensive crops, which makes depletion of ground water table more obvious.

• R&D expenditure as a percentage of agricultural gross domestic product (GDP) has increased from 0.18 percent in 1981 to 0.34 percent in 2000. China’s (US$ 3,150 million) public agricultural R&D spending was almost twice as compared to that of India (US$ 1,858 million) in the year 2000.


According to a paper by Prof. Utsa Patnaik titled Agrarian Crisis and Distress in Rural India, June 10, 2003,

  • There are other factors behind rural distress apart from drought. Drought actually accentuated a state of distress in rural India that has been growing ever since the 1990s.


  • When we bear in mind the additional fact that the per capita calorie intake has gone down drastically for the entire rural population from 2309 kilo calorie per diem in 1983 to 2011 kilo calorie per diem in 1998, and hence is likely to have gone down even more drastically for the rural poor, the fact of growing rural distress stands out in bold relief.


  • The fact that accumulation of such enormous foodstocks has occurred despite a stagnation (or even a marginal decline) in per capita foodgrain output in the country during the 1990s, suggests that the cause of this accumulation is the absence of adequate purchasing power of the rural population. In other words, the period of neo-liberal reforms has seen a significant curtailment of purchasing power in the hands of the working people, especially in rural India, which has caused growing distress on the one hand and an accumulation of unwanted foodstocks in the hands of the government on the other



According to a presentation by Priya Deshingkar titled Migration of Labour in India: Distress, Accumulation and Policy Lessons, August 29, 2003,

  • Migration is a routine livelihood strategy and not simply a response to shocks – corroborated by case studies from all over India


  • Migration can lead to the accumulation of wealth, particularly where there are marketable skills or established employment relationships;


  • Processes of social exclusion prevent people from moving from low-return and insecure migration to more rewarding types (segmented labour market)


  • Accumulative outmigration can occur from poor areas and distress/short term coping migration can occur from well-endowed areas.


According to Agriculture Sector Study: Critical Issues and Strategic Options,

  • Overall the agricultural sector grew at 1.85% per annum in the period 1995/96 to 2004/05. The growth rate in the period 1984/85 to 1995/96 was 3.6%. The stagnation is most evident in foodgrains–their per capita availability in 2004/07 was 186 kgs as against 207 kgs in 1991/95.


  • Nearly two-thirds of agricultural land is degraded to some extent. Only about one-third is in good health. Soil erosion due to rain, streams and floods is the main form of land degradation affecting 94 million hectares. 22 million hectares suffer from acidity or salinization while another 14 million hectares are water logged. Besides these forms of degradation, soil health has also been compromised by loss of macro and micro-nutrients and organic matter that occurs due to crop cultivation. The distortionary fertilizer policy has contributed to the nutrient imbalance in the soil.


  • Although livestock and fisheries have been growing faster than the crop sector and together account for nearly 30% of agricultural GDP, this sector has not been given its due in terms of both policy attention as well as public investment. This sector is also important from an equity point of view. Livestock ownership is widely distributed among the poor and is a valuable income supplement in mixed farming systems. Further, in arid and semi-arid environments which are not friendly to crop agriculture, there is a greater dependence on livestock agriculture. There is a strong complementarity between crop and livestock; a large portion of livestock is used as draught animals and their feed consists largely of crop residues and agricultural byproducts. In addition, the manure from livestock is a source of fertilizers and is also used as fuel.


A study titled The Dragon and the Elephant: Agricultural and Rural Reforms in China and India by Shenggen Fan,, finds: 

  • Inequality in China has more than doubled in the last two decades, with the Gini coefficient jumping from 0.21 in 1978 to 0.46 in 2000 and placing China among the highly unequal economies of the world. The income Gini coefficient was 0.33 in 2000 for India.


  • Both India and China face the thorny challenge of effectively implementing policies to conserve water and raise use efficiency without compromising food production or causing adverse welfare effects on the poorer farmers. In both countries there is vast scope for improvement in water use efficiency through institutional and management reforms of existing water systems. India’s experience with water users’ associations, participatory watershed schemes, and community-based rain harvesting can provide useful examples to learn from.


  • Despite their remarkable achievements both China and India continue to be characterized by some of the typical features of developing countries: low income per capita and a majority of the population living in rural areas and dependent on agriculture for their livelihood. In 2001 the rural population was 71.8 percent of the total in India and 63.3 percent in China (World Development Indicators—WDI 2004), while the share of the population engaged in agriculture was still as high as 58 percent of the overall workforce in India and 50 percent in China.


  • Improved terms-of-trade for agriculture during the first half of 1990s in turn resulted in an increase in the profitability of the primary sector relative to industry and led to a rise in private investments, which are now double the public investment in agriculture. These investments were increasingly directed to the production of horticulture, poultry, fish, milk, and eggs in response to booming consumer demand for these high-value agricultural produce. These commodities experienced a remarkable growth in output during the 1990s relative to the previous decade.

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