The colour of a kisan's money, and why farm credit is an unsticky subject

Were our crops to be tied, cyclically and in uneasy dependence, to the trickles of credit, India's food stocks would be in a desperately poor state and food insecurity would stalk every district. To hear it from the Government of India and its multitude of agencies and allies, all of which in one way or another are connected with agriculture and food, the needs of the kisan can be well met, and it takes only the kisan, toiling soul that she is, to "avail" of such plenitude.

Easier stated than done. We at Agropedia do not doubt the intentions that have made these provisions, but we prefer to see proof on the ground, in the fields of our marginal and small farmers, rather than as optimistic indicators that adorn the pages of reports read by no farmer. Where is this disconnection taking place? To borrow from the world of film, Yojana Bhavan and Krishi Bhavan, we have a problem! And it is this: the basis of every school of conventional economic thinking is scarcity - the idea that there is "not enough for everyone" - and the dramatic effects this reality has on human behaviour, and the measurement of behaviours is after all the DNA of economics. This allegation of scarcity is the foundation on which all of the economic systems of past and present are built.

Hence the problem is, are conventional economics approaches (from which flow these heavily-referenced reports and surveys that inform us about the state of India's agriculture and food) any use for analysing a post-scarcity economy? Such as the ones our 640 districts will face over the next 25 years, and indeed which they face every time there is a flood or a drought? I think not. We should rather break free from analysing these matters and issues in the binary terms of 'price' and 'cost' - these are economics 'tags' that we intuitively know have no significance in an agro-ecological system. For social scientists and multi-disciplinarians, this is simple enough, not so for the organs and apparatus of governance. Yet for the sake of reaching an understanding that is more in tune with the kisan, it is unavoidable. When will one culture of understanding displace the other? At Agropedia, we cannot foretell, but we can encourage it.

Let us make a rapid and selective review of what is being said about credit, the provision of money, to our farmers and agriculturists. The following paragraphs are from the Reserve Bank of India's 'Report of the Committee on Priority Sector Lending (2012 February), whose executive summary has said: "The need for directed lending in India would continue considering that there is lack of access to credit for a vast segment of the society. Credit remains a scarce commodity for certain sections/sectors and they continue to remain outside purview of the formal financial system. Therefore, those sectors where sufficient credit does not flow, those people who do not get adequate credit may get the benefit of directed lending."

There are a few important insights that this paragraph provides. One, perhaps the most important, is that credit is presented as simultaneously a need for the small farmer and as a commodity (a scarce one, do you notice?). Two, there is a formal and an informal, and it is the products of the formal that are presented as possessing the ability to solve the small and marginal farmer's problems. Three, there is a class stratification within the recipients of credit, those who are "financially included" and those who are not - and we have seen enough evidence over the last decade to show that the overlap of the marginal farmers and the financially excluded is very high, high enough to have been surprising two Plan periods ago, and for the measures this RBI report is discussing now, to have been not a preface, but an epilogue.

The RBI report hits the right notes in the feelgood statements department: "Agriculture is an important sector considering the livelihood it generates for almost two-third of India's population" and "It is also critical for ensuring food security and poverty alleviation". What comes next indicates the administration mind at work, and not the farmer's friend. For this is what the RBI report also says: "This sector needs to be seen as a single set of activities encompassing production, storage and distribution" and moreover, that there is "a seamless inter-connectedness of the entire agriculture value chain its impact on output, income and employment in rural economy is highly positive".

This is why - Yojana Bhavan, Krishi Bhavan, and Dr D Subbarao (RBI) - we have a problem. For these administrative and governance and policy organs see agriculture and food, the cultivation of the cereals and pulses and vegetables and fruit that sustain us, as an industrial process. This consortium of policy considers "agriculture and allied activities" as what it calls "a composite sector within priority sector" and has advocated the doing away with of the distinction between direct and indirect agriculture lending. This should not have been the approach - certainly not when the findings of the same committee that wrote this report indicate that small and marginal farmers are not touched by the "formal" - more than eight out of 10 cultivator households in India are outside formal financial channels. The rest of the discussion is then about access and eligibility and criteria and possible rate of growth in accounts of farmers. For small and marginal farmers, for the landless agricultural labourers, tenant farmers, oral lessees and sharecroppers, for these women and men, whose parents gave a young independent India the strength and cause to proclaim "Jai Jawan, Jai Kisan", for them to be turned into ranks of beneficiaries whose land livelihoods are considered only as GDP factors, is to my mind a cultural insult.

Who is being stereotyped here? The 'Situation Assessment Survey of Farmers', conducted as part of 59th Round of the National Sample Survey (January to December 2003) told us there were then 75 million small and marginal farmer households - that is, more than four out of five of all cultivating households for whom agriculture is a major activity. Are we seeing a Twelfth Plan in which 75 million such households are viewed as an enormous swarm of ready customers for rural banks, and as denatured contributors to an improvement in indicators of how India manages scarcity? Or should we see a Plan, this and the others to follow it, which allows for the steady de-industrialisation of cultivation, a de-carbonisation of growing rituals, a return to the cultural underpinnings of coaxing food from soil? At Agropedia, we advocate culturally sensitive reflection of these questions, with fresh minds freed from the confines of scarcity economics and GDP trajectories.