Table Of ContentPaper for VI. Global Labour University Conference, Berlin
Globalization, Liberalization and Agrarian Distress: A Study of Suicides among Farmers
in India
Gaurang R. Sahay1
Following the discursive principles of globalization, India systematically started liberalizing its
economy from 1991 by adopting the primary policy instrument of the neo-liberal economic
agenda, i.e., structural adjustment programme. Consequently, important domestic regulatory
measures were either removed or slackened in the name of liberalization or economic reforms
accompanied by an encouragement for free trade, technology imports and foreign direct
investment. While it is claimed in the government policy pronouncements including some
academic studies that the economic reforms has brought about huge potential for all-round
economic development in India, the facts from rural India presents a conflicting picture. The
process of economic reforms has in fact brought about a deep crisis in agrarian sector and
consequently augmented the vulnerable and insecure condition of peasants and agricultural
labour in rural India. This crisis manifests itself in different forms in contemporary India such as
increasing rural violence in the name of Naxalite or Maoist and other such social movements,
ongoing massive distress-led migration from villages, and innumerable cases of farmer/peasant’s
suicides. In this paper, based on data from government reports and academic research works, an
attempt has been made to substantiate this observation by analyzing the social, political and
economic state of affairs during the phase of economic reforms that has created conditions for
suicides among farmers in the various parts of India.
Globalization, Global Institutions and Structural Adjustment Programme
The term globalization began appearing on a regular basis in the mainstream social science
disciplines since the early 1980s. It began appearing primarily as a reference in the realm of
economy for the growing free market but soon after included many political connotations such as
weakening of the authority of the state and an emergent global governance system and cultural
1 Gaurang R. Sahay is Associate Professor at the Centre for Development Studies, Tata Institute of Social
Sciences, Mumbai 400 088. Email ID: [email protected]
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implications such as emergence of a homogenous global civil society and a global culture, and
became part of public imagination in the form of an allusion to some specific events, such as the
protests against World Trade Organization (henceforth WTO) in Seattle and the passage of the
North American Free Trade Agreement (henceforth NAFTA). The term, in a very short span of
time, became the cliché of contemporary times, and as Zygmunt Bauman writes it ‘is on
everybody’s lips; a fad word fast turning into a shibboleth, a magic incantation, a pass-key meant
to unlock the gates to all present and future mysteries’ (Bauman 1998: 1). Consequently, this key
idea of late twentieth century soon became an integral part of teaching, discussion and research
the world over. Now there are numerous studies devoted to the issue of globalization which are
too vast in scope and diverse in nature to be coalesced around a common set of statements
regarding its nature, meaning, beginning, scope, impact, etc. (see, for example, Albrow 1996,
1997; Axford 1995; Beck 1999; Beynon and Dunkerley 2000; Giddens 1990, 1991, 2000;
Guidry, Kennedy and Zald 2000; Harvey 1989; Held et al. 1999; Held and McGrew 2002; Hirst
and Thompson 1996; Keck and Sikkink 1998; Kennedy 1993; Mittelman 2000; Robertson 1992;
Rodrik 1997). However, despite variations, the studies share a common emphasis on the flows of
capital, labour, information, technology, and culture globally. It is commonly thought that ‘The
term globalization captures elements of a widespread perception that there is a broadening,
deepening and speeding up of world-wide interconnectedness in all aspects of life, from the
cultural to the criminal, the financial to the environmental. At issue appears to be a ‘global shift’;
that is, a world being moulded, by economic and technological forces, into a shared economic,
political, and cultural arena (Held et al. 1999). This apart, the globalization discourse also
unmistakably believes that globalization provides an ideological framework for the proposed and
well articulated neo-liberal solutions, in the name of liberalization or privatization or economic
reform, to economic problems and insecurity or vulnerability confronted by societies at large in
different parts of the world. The discourse also lists certain institutions and creates space for
them to play specific predefined roles to realise the neo-liberal solutions in concrete terms. These
institutions are mainly International Financial and Trade Bodies and Transnational Corporations.
International Financial and Trade Bodies include a number of Institutions and
Agreements such as the Bretton Woods Organisations (International Monetary Fund (henceforth
IMF) and the World Bank), the World Trade Organization (henceforth WTO), regional
institutions like the Asian Development Bank, Free Trade Area of the Americas, Organisation
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for Economic Co-operation and Development, multilateral agreements such as the General
Agreement on Tariffs and Trade and Kyoto protocol. Of these Institutions and Agreements,
International Monetary Fund and the World Bank are the most critical instruments for realizing
the neo-liberal agenda. IMF supervises global macro economic affairs, lends with the purpose of
realizing structural adjustment of national economies, and makes technical and institutional
knowledge available to bring about stability in economic system worldwide. The World Bank
offers development aid to national governments as well as aid to corporate bodies to improve
their functioning by following structural adjustment programme. Thus, both organizations, with a
commitment to neo-liberal ideologies and agenda, put emphasis on structural adjustment
programme, and accordingly create the required environment and policy, and advice and oblige
individual nation-states to privatise the process of production and governance and open their
boundaries for Transnational Corporations, global markets and free trade. Transnational
Corporations act as the main driver of the process of globalization in the economic realm. Their
character is transnational, but they are in favour of retaining the nation-state so that they can use
it as a tool to consolidate their operations geographically. Concurrently, the WTO through
various rounds, particularly the Uruguay rounds, tries to provide a formal and universal shape to
trade negotiations including farm trade negotiations worldwide. All three organisations (IMF, the
World Bank and WTO) consult each other and work collectively to realize the neo-liberal
economic agenda by restructuring the economy of nation-states through structural adjustment
programme.
The World Bank defines structural adjustment as ‘reforms of policies and institutions
covering micro-economic (such as taxes and tariffs), macro-economic (fiscal policy) and
institutional interventions; these changes are designed to improve resource allocation, increase
economic efficiency, expand growth potential and increase resilience to shocks’ (cited in Skogly
1991: 755). Thus, the term structural adjustment refers to ‘A programme of policies designed to
change the structure of an economy. Usually, the term refers to adjustment towards a market
economy, under a programme approved by the IMF and/or World Bank, which often supply
structural adjustment funds to ease the pain of transition’ (http://www.economist.com). In the
early 1990s, J. Williamson (1993) coined the ‘Washington Consensus’ term to refer to the ten
policy measures that make up structural adjustment programme, which are as follows:
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1. Observing Fiscal Discipline: It means cutting back public expenditure and increasing
interest rates on borrowing so that the government’s expenditure is not more than its
revenues and thus not running in deficit;
2. Redirecting Public Expenditure Priorities: It implies prioritising expenditure toward
sectors offering both high economic returns and the potential to improve income
distribution such as infrastructure, primary health and education;
3. Reforming the System of Taxation: It denotes lowering tax rates and broadening the tax
base;
4. Liberalizing Financial and Interest Rate: It is directed toward boosting foreign
exchange earnings;
5. Making Exchange Rate Competitive: It stands for devaluing national currency and is
considered key to nurturing export-led and crisis-free growth;
6. Liberalizing Trade: It is designed in order to boost foreign exchange earnings by
promoting exports in goods and services;
7. Liberalizing Inflows of Foreign Direct Investment: It is expected to attract foreign
investment by eliminating trade barriers, and to facilitate imports;
8. Privatizing Economy: It is based on the premise that privatization can raise efficiency in
different sectors of economy and improve the public finances;
9. Deregulating Economy: It is meant to promote more efficient allocation of resources
including labour;
10. Ascertaining Secured Private Property Rights: It is based on the premise that secured
private property right is a must for the free market and trade.
Economic Reforms and Agrarian Crisis
It is an acknowledged fact that rural India was an extremely backward social formation and faced
numerous development-related problems such as landlessness and lack of resources and assets,
poverty and indebtedness, lack of educational facilities and illiteracy, malnourishment and poor
conditions of health and sanitation, etc. during the pre-economic reform phase. India’s official
approach to resolve these problems was critically disliked by several scholars, development
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agencies, and national and international financial institutions such as the World Bank (Parikh
1993, 1997; World Bank 1986, 1991; Pursell and Gulati 1993). It was argued that the official
approach deliberately created barriers to agricultural development or growth in agricultural
surplus by skewing the terms of trade against agriculture through protectionist trade policies and
an overvalued exchange rate. Therefore, liberalization or opening up of agrarian sector would
lead to higher price or correct price of agricultural produce resulting into increase in incentive in
agriculture and consequently in the growth of agricultural activities and agricultural production.
Since India had major comparative advantages in diversifying its cropping pattern in favour of
highly valued and universally sought-after crops such as fruits, vegetables and flowers, free trade
and openness would maximize efficiency and gains in agrarian sector. In this context, it was also
contended that the process of liberalization would make terms of trade favourable to agricultural
growth in India by cutting down on subsidies and doing away with the policy of output support
prices and procurement of food which was fiscally unsustainable and had usually suppressed
prices of agriculture produce and proved inefficient and costly to farmers. The process of
economic reform promised to make agrarian sector competitive, efficient and productive through
deregulating agricultural credit, contract farming, raising land ceilings or putting an end to state-
led land reform programme, private sector agricultural research and making non-government
organization a partner in the agricultural extension system.
The data pertaining to agriculture in India in the last two decades clearly point out that
the Structural Adjustment programme based economic reforms did not keep its promises, and in
fact resulted into large-scale crisis in rural India by creating some new problems and
exacerbating the existing ones. It happened because the process of reforms, contrary to the stated
expectations, has had severe adverse effects on agriculture, the main occupation in rural India
that currently employs around 57 per cent of India’s population, which are as follows.
Increasing Landlessness and Inequality in Landholdings
Under the neo-liberal policy framework, crop diversification became a desirable policy
objective. Therefore, India shifted its cropping pattern from less-remunerative food grains to
high-value and export-oriented cash crops. Such a change in the cropping pattern required an
endorsement of economies of scale in agriculture. Thus, the policy prescribed concentration of
land through purchase or leasing in by big landowners in the name of private firms
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(Ramachandran and Ramakumar 2000; Athreya 2003). That is why during the post reform period
there has been an increase in the inequality of distribution of land owned. This apart, raising or
lifting of land ceilings for privately owned firms has accelerated land concentration in rural India
and also reduced the amount of ceiling-surplus land to be supposedly distributed among growing
landless people (Ramachandran and Ramakumar 2000). This trend in rural India has increased
substantially land price and accordingly ousted small farmers out of land market. To quote S.
Hirashima:
If the land leased out from small and marginal farmers to progressive farmers or
landlords, whose objective of renting in land is to take advantage of economies of scale,
then it would be difficult to terminate such a contract when land has already become an
integrated part of scale farming. The land would remain leased out, or ultimately sold out
(Hirashima 2000: 3884).
Declining Productivity in Agriculture and Increasing Marginalization of Peasantry
During the post-reform phase the sectoral distribution of Gross Domestic Product (GDP) in India
has seen a consistent declining share of agriculture. However, the shifting of associated labour
force from agriculture has been much less than proportionate. In 2004-05, the share of
agriculture in GDP was 20.2%, and the workforce employed in agriculture constituted 56.5% of
the total workforce (see Table 1).
Table 1
Share of Agriculture in GDP and Employment
Year Share of Share of Ratio of Ratio of
Agriculture in Agriculture in Worker Worker
GDP at 1999- Employment - Productivity in Productivity in
2000 Prices (%) UPSS (%) Agriculture to Non-
Non- Agriculture to
Agriculture Agriculture
1972-73 41.0 73.9 0.26 3.92
1993-94 30.0 63.9 0.24 4.12
1999-00 25.0 60.2 0.22 4.55
2004-05 20.0 56.5 0.20 5.12
Note: GDP denotes Gross Domestic Product, and UPSS denotes Usual Principal and
Subsidiary Status.
Source: Central Statistical Organisation (CSO), National Accounts Statistics, Various
Years, and National Sample Survey Organisation (NSSO), Various Rounds.
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Cited in Government of India (henceforth GoI) (2007), and Posani (2009).
The burden of this high percentage of agricultural labour force along with their much less
inter-sectoral relative productivities gets further compounded because of a steadily contracting
cultivable land area and a huge increase in the proportion of marginal landholders. During 1960
to 2003 the cultivable land area declined from 133 million hectares to 108 million hectares,
whereas the number of holdings doubled from 51 million to 101 million (see Table 2). This has
led to a sharp decline in the average size of the holding, leading to increasing number of
marginal farmers from 39.1% in 1960-61 to 71% in 2003. This category of farmers operates only
22.6% of the total land. The number of small, medium and large farmers has declined during this
period2 (see Table 3). Such pattern of land ownership adds significantly to the agrarian crisis in
India in terms of insecurity associated with cultivation of marginal land holding and the
associated practice of sharecropping, high input costs, inadequate returns, and difficulties in
accessing credit, etc. (Assadi 1998).
Table 2
Certain Key Characteristics of Operational Land Holdings
1960-61 1970-71 1980-81 1990-91 2003
(17th (26th (37th (48th (59th
Round) Round) Round) Round) Round)
1. Number of
Operational Land 50.77 57.07 71.04 93.45 101.27
Holdings (millions)
1. 1 Percentage _ 12.4 24.5 31.5 8.4
Increase
2. Land Area 133.48 125.68 118.57 125.10 107.65
Operated (million
Hectares)
3. Average Land Area 2.63 2.20 1.67 1.34 1.06
Operated (hectares)
Source: NSSO, Some Aspects of Operational Landholdings in India, Various Rounds.
Cited in GoI (2007), and Posani (2009).
2 The 59th Round of the NSS defines marginal farmers as those possessing 0.01-1.00 hectares
small as those with 1.01-2.00 hectares. Large farmers were those with >10.00 hectares.
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Table 3
Changes in the Size Distribution of Operational Holdings and Operational Area
Category Percentage of Operational Holdings Percentage of Operated Area
of
Holdings
1960- 1970- 1981- 1991- 2003 1960- 1970- 1981- 1991- 2003
61 71 82 92 61 71 82 92
(17th) (26th) (37th) (48th) (59th) (17th) (26th) (37th) (48th) (59th)
Marginal 39.1 45.8 56.0 62.8 71.0 6.9 9.2 11.5 15.6 22.6
Small 22.6 22.4 19.3 17.8 16.6 12.3 14.8 16.6 18.7 20.9
Semi- 19.8 17.7 14.2 12.0 9.2 20.7 22.6 23.6 24.1 22.5
medium
Medium 14.0 11.1 8.6 6.1 4.3 31.2 30.5 30.1 26.4 22.2
Large 4.5 3.1 1.9 1.3 0.8 29.0 23.0 18.2 15.2 11.8
All Sizes 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Source: NSSO, Some Aspects of Operational Land Holdings in India, Various Rounds.
Cited in GoI (2007), and Posani (2007).
Changing Cropping Patterns and Diminishing Food Security Status
With the opening-up of the economy, expectations of the export opportunities and higher world
prices of agricultural commodities led many farmers to move into cash crops, away from food
crops (Venu Menon 2006). Devaluation of the rupee made Indian exports cheaper and hence
attractive on the world market, and further helped shifting from food crops into the cash crops
(Christian Aid 2005). On aggregate, the total area of the country’s farmland growing food grains
declined by 18 per cent in the decade after 1990-91, whereas areas growing cash crops of cotton
and sugarcane increased by 25 per cent to 10 per cent respectively (Shiva 2005). This process
has led to a sharp decline in the food grains production and has seriously started threatening the
status of India as a 'food secure' nation after 1990-91.
The proponents of economic reform argue that the slow-down in food grain or cereal
production after 1990-91 does not reflect on structural crisis in Indian agriculture, but on the
changing consumption patterns, from cereals to high-value products like fruits, vegetables, milk
products, meat, eggs and fish, driven by higher incomes across different sections of our society
during the phase of liberalization (Government of India 2005; Gulati and Mullen 2003;
International Food Policy Research Institute 2005). This is also supported by data from the
NSSO rounds which show that along with the slowdown in food crops production in the 1990s,
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there was also a noticeable fall in the per capita consumption of cereals and an increase in the per
capita consumption of fruits, vegetables, milk products, meat, eggs and fish in the rural India.
However, there are many who do not buy this argument because this period has witnessed a
sharp fall in the levels of per capita calorie consumption. NSSO data also show that the per
capita per day calorie intake in rural India fell from 2266 Kilocalories in 1972-3 to 2183
Kilocalories in 1993-4, and 2149 Kilocalories in 1999-2000 (Patnaik 2001; Swaminathan 2006).
This fall was more conspicuous among the poorer or weaker sections of society. Given the
falling calorie intake along with a high level of malnutrition in rural India, the fall in food grain
consumption can only be seen as a signifier of agrarian/rural crisis. Abhijit Sen suggests that
among the relatively poorer sections, the share of income spent on food was increasingly
squeezed in the 1990s by the growing shares of expenditures going towards health, fuel,
transportation and education (cited in Chandrasekhar 2007).
Declining Growth Rates of Agriculture
Diminishing production of food grains is happening along with declining growth rate of
agriculture in the post-reform period. The growth rate of agriculture by gross product (GDP from
agriculture) fell from 3.08% during 1980-81 to 1990-91, to 2.57% during 1992-93 to 2005-06
(see Table 4). This included a fall to 1.3% in 1999-2000 and even a negative growth of -2% in
2000-2001 (Posani 2002: 22). The growth rate by yield of all crops taken together dropped from
3.19% during 1980-81 to 1990-91, to 1.58% during 1990-91 to 2003-04 (see Table 5). State-wise
disaggregation of the data shows that this slowdown has occurred in most states except Bihar,
Gujarat and Orissa. Even these states had a low base and the growth rates were very low (see
Table 6).
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Table 4
Growth of Gross Domestic Product (GDP), Sectoral GDP, and Per Capita Income
Year Agriculture Industry Services GDP at Factor Per Capita NNP at
Cost Factor Cost
1980-81 to 3.08 5.79 6.54 5.15 2.82
1990-91
1992-92 to 2.61 5.82 7.65 5.85 3.89
2002-03
1992-93 to 2.57 6.05 7.72 6.00 4.10
2005-06
1950-51 to 2.54 5.19 5.40 4.26 1.94
2005-06
Note: Growth is Compound Annual Growth Rate, and NNP denotes Net National Product.
Source: CSO, National Accounts Statistics, Various Years.
Cited in GoI (2007), and Posani (2009).
Table 5
Growth of Area, Production and Yield of Major Crops in India
Crop 1980-81 to 1990-91 1990-91 to 2003-04
Area Production Yield Area Production Yield
Rice 0.40 3.56 3.47 0.15 1.14 0.99
Wheat 0.46 3.57 3.10 0.74 2.13 1.35
Coarse -1.34 0.40 1.62 -1.58 0.25 1.87
Cereals
Total Cereals -0.26 3.03 2.90 -0.25 1.32 1.58
Total Pulses -0.09 1.52 1.61 -0.87 -0.74 0.16
Food grains -0.23 2.85 2.74 -0.44 1.16 1.11
Sugarcane 1.44 2.70 1.24 1.41 1.22 -0.16
Oilseeds 1.51 5.20 2.43 -1.07 0.18 1.26
Cotton -1.25 2.80 4.10 0.82 0.15 -0.69
Non-Food 1.12 3.77 2.31 -0.09 1.20 0.62
grains
All Crops 0.10 3.19 2.56 -0.25 1.58 0.90
Note: Growth is Compound Annual Growth Rate.
Source: Ministry of Agriculture, Area and Production of Principal Crops in India, Various Years.
Cited in GoI (2007), and Posani (2009).
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Description:1. Following the discursive principles of globalization, India systematically started
liberalizing its economy from 1991 by adopting the primary policy instrument of
