How has the movement of agricultural prices during the post-liberalisation period been responsible for farmers' distress in India?

Pre-Liberalisation Price Support System

Before 1991, the agricultural price policy was largely interventionist. The Food Corporation of India (FCI), established in 1964, played a central role in procuring grains at MSPs and maintaining buffer stocks. Regulated Agricultural Produce Market Committees (APMCs) ensured farmers received a fair price within their respective states. This system, while imperfect, provided a degree of price stability and income security.

Post-Liberalisation Changes and Impact

The liberalisation of the Indian economy in 1991 brought significant changes to agricultural pricing:

• Reduced State Intervention: The emphasis shifted from direct price support to market-led pricing. Subsidies on inputs like fertilizers were reduced, increasing production costs for farmers.
• Trade Liberalisation: Lowering of import tariffs exposed Indian farmers to global competition, often resulting in lower prices for their produce.
• Weakening of APMCs: While APMCs continued to exist, their effectiveness was diminished due to the rise of private markets and limitations in infrastructure.
• Volatility in Commodity Prices: Global commodity price fluctuations had a greater impact on Indian agricultural markets, leading to increased price volatility.

Consequences for Farmers

These changes had several detrimental consequences for farmers:

• Price Volatility & Income Uncertainty: Fluctuating prices made it difficult for farmers to plan their cropping patterns and manage their finances.
• Increased Indebtedness: Lower prices and rising input costs led to increased borrowing from informal sources at high interest rates, trapping farmers in a debt cycle.
• Farmer Suicides: The combination of debt, crop failures, and lack of social safety nets contributed to a rise in farmer suicides, particularly in states like Maharashtra, Karnataka, and Punjab. According to the National Crime Records Bureau (NCRB) data (as of 2021, knowledge cutoff), over 5,579 farmers died by suicide in 2021.
• Distress Sales: Farmers were often forced to sell their produce at below-cost prices due to lack of storage facilities and market access.

Regional Variations

The impact of price movements varied across regions. For example:

• Rice & Wheat Growing Regions (Punjab, Haryana): Benefited initially from MSPs but faced issues related to water depletion and declining soil fertility.
• Cotton Growing Regions (Maharashtra, Andhra Pradesh): Highly vulnerable to global price fluctuations and pest attacks, leading to significant distress. The Bt cotton revolution initially helped, but subsequent pest resistance and price crashes created problems.
• Horticulture (Maharashtra, Karnataka): While offering higher returns, horticulture is susceptible to market gluts and lack of cold storage infrastructure.

Government Interventions & Their Limitations

The government has implemented several schemes to address farmer distress, including:

• Pradhan Mantri Kisan Samman Nidhi (PM-KISAN): Provides income support to small and marginal farmers.
• Pradhan Mantri Fasal Bima Yojana (PMFBY): Crop insurance scheme to protect farmers against crop losses.
• e-NAM: National Agriculture Market, an online trading portal to facilitate better price discovery.

However, these schemes have faced challenges in implementation and coverage, and their impact on reducing farmer distress has been limited.