Farmers Suicide in Rampur

by
Anirudh Goel
PGRM student in IRMA

Case Study:

At the office of Shree Shyam NGO, in Khandwa, Madhya Pradesh, Mr. Kartik Tibrewal is
worried about the increasing suicide cases among the farmers of the nearby village Rampur. Mr.
Tibrewal is the chief manager of the microfinance department of the NGO. Mr. Tibrewal’s
department is involved in giving small loans to the villagers up to a limit of 5 lakhs primarily for
agriculture purposes at the rate of interest of 8%. Shree Shyam NGO is also involved in making
SHG (Self Help Group) and providing a loan for the same at the rate of interest of 9.5%.

For the last three years, Khandwa district is facing an acute problem of recurring droughts.
Almost 50% of the cultivated area is irrigated, however, the irrigation is done by the use of
groundwater is replenished by the rain. Hence, due to the scarcity of the rains, the current
groundwater is not enough to irrigate the fields. This has led to the poor harvest for farmers for
the last three years. Though the local MP from Khandwa has proposed the construction of a
canal from the nearby river Narmada which has been approved by the state government the
project is yet to be started.

This has led to a sudden rise in suicide cases. In the last one year, 19 people have committed
suicide due to increasing debt. Mr. Tibrewal is worried about the situation and asked his team to
enquire about the main reasons for the farmers committing suicides. From the villagers, Mr.
Tibrewal came to know that the farmers who have committed suicide came from the Rajput
community of the village. This was quite strange for him because the farmers from the Rajput
community usually had medium to large landholdings and were primarily involved in farming
with no other source of income.

In a weeks’ time, Mr. Tibrewal was able to gather much of the information through his team.
They took surveys from all the households of the village. His team did not face any major issues
while performing the surveys due to the recognition of the NGO among the villagers.

Mr. Tibrewal has created a small report from his team’s surveys and other findings.

The village Rampur had a population of 1504 in the year 2018. There are more than 243
households in the village including a few households who have temporarily migrated from the
village for the seasonal occupation to nearby cities. Of these 243 households, 82 belong to the
general category, 12 belong to the OBC category, 4 belong to the SC category, and 145 belong to

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the ST category. The village is dominated by the Bhil community, ST category, and Rajput
Community, General category. Though smaller in population than the Bhil community, Rajput
Community still enjoys social and political domination. This is due to their higher caste as well
as their occupation. The average size of a household is 4-5 members. Almost all the members of
a household above 18 years of age either work as casual laborers or works in their own fields.
Most of the Rajput households are involved in agriculture practices as their main livelihood.
Bhil’s are involved in casual laboring and livestock farming with a few households involved in
agriculture practices in their lands. OBC households are either self-employed in activities like
brick molding or pottery or related activities or are in government services. SC households are
involved in both agriculture and livestock farming. The main occupation of residents of Rampur
is farming and farming related activities.

The people of the village Rampur are involved in mainly two sowing seasons in the village Rabi
and Kharif season. Majority of the farmers prefer Kharif season for sowing due to their
dependency on rains. While Rabi season crops are sown in winter when the availability of water
is scarce and the main crop of this season is wheat, which requires a huge amount of water. From
the Exhibit 1 we can also see that most preferred crops are wheat and soybean.

The diversity of the crops is seen during the Kharif season in Exhibit 2 and Exhibit 3. As we can
see through these charts that food crops are the most preferred crop type sown by cultivators,
soybean being the most preferred food crop. However, if we compare the area sown under
soybean with the other crops then we see that only soybean and to some extent cotton is sown for
market purposes. While all the other crops are sown for the consumption purpose.

Due to the decrease in diversity of the crops, farmers have become more prone to risk and
financial loss. Last three years, 2015, 2016 and 2017 due to drought had been bad for agriculture
and have significantly affected the production of soybean, leading to an increase in farmers’
debt.

The farming structure (Exhibit 4) is influenced by caste dynamics. It is divided along caste lines.
In the occupation of the cultivator, salaried workers and the self-employed, there is a dominance
of general cast while Schedule Tribe (STs) is found majorly involved in labor and livestock. The
reason behind such segregation in the job along the caste lines is because majority of the
agriculture land is owned by the General Community while the ST community has very less or
no land and sub-optimal irrigation infrastructure. Hence, they focused on growing maize because
it was less water-intensive crop and maize was the main staple food for this community. Also,
the education level of the ST community is low as mentioned in the education section due to
which they are left behind for the menial jobs like daily wage laborers either in agricultural land
or at a brick kiln. However, many of them have started moving towards animal husbandry.

In the livestock, households’ rear cows, ox, buffaloes, and goats. However, cows, buffaloes, and
ox are reared for personal use. Goats were the only livestock that is reared for commercial
purposes. Still, very few households were involved in goat rearing. But as the demand for goat
meat is increasing, more and more households are keen to take up goat rearing. Its low initial
capital requirement and easy liquidation of money have led to its popularity. Still, most of the
villagers involved in goat rearing are from the Bhil community.

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The preference for financial institutions, both formal and informal, is highly dependent on
several factors and remoteness being the major one. Most of the formal financial institutes like
public banks, Grameen bank, private bank, post office, etc. are quite far from the village, which
decreases or limits the utility of these institutes. The current interest rate for loans provided by
the various financial institutes is given in Exhibit 6.

Formal financial institutes are preferred for big loans like agriculture loans or housing loans.
Formal financial institutes are preferred for such loans because apart from providing loans at
low-interest rates, villagers also benefited from the subsidy provided by the government. The
subsidy on the interest rate was directly credited by the government in the loan accounts of the
villagers.

For the other loans, like medical loans, personal loans, etc. non-financial institutions were
preferred due to their proximity. Though the lending rate for non-financial institutions is very
high with respect to the lending rate of financial institutions, non-financial institutions were
preferred due to their easy accessibility.

The reasons for preferring non-formal Institutes are many. First, they are in proximity which
reduces the travel cost and opportunity cost that they have to forgo by losing their day’s wage,
which often happens informal institutions.

Secondly, non-financial institutions do not ask for collateral as security for loans.
Thirdly, there is no documentation trail for these institutions like informal banking, which leads
to wastage of time and resources for these people.

Fourthly, the revenue from the agriculture produce comes only after the harvest is sold, which is
quite long, hence during these times often households require some money for their
consumption. Since the consumption loan is not provided by the formal financial institutions
they have to fall back upon non-formal financial institutions.

Fifth, often the households require urgent loans for the medical emergency or for marriage or any
other ceremony, and for these activities, formal institutions do not provide loans and if they do,
they take a huge amount of time from documentation to disbursement of cash.

Households take agriculture loans from formal financial institutions because of its advantages
like, households can access the government’s subsidies and other benefits which can be availed
in these institutes but not in non-formal financial institutes. So, the overall impact of the formal
banking system is not felt by small farmers and landless agricultural laborers.

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The wide gap can be seen in Deposit rates paid and the Interest rate charged by both formal and
informal institutions. However, gap is less in the case of formal institutions as compared to
informal institutions. Reasons being high administrative cost, high logistical cost, low-value low
volume transaction.

Thus, we can say that in spite of the numerous steps taken by the Government, most people
suffer from financial exclusion. A financially inclusive ecosystem helps in the generation of self-
employment opportunities especially in farm and non-farm sectors. Less dependence on the
informal sector help to circumvent the debt trap resulting in more social and economic mobility,
better standard of living and human development index, facilitate entrepreneurship among
women.

Most of the farmers who took the above loans belonged to the Rajput community. As most of
them were involved in farming, therefore, their income was also dependent on the farm outputs
which came only twice a year. Therefore, they required more loans for different reasons
mentioned above.

However, households involved in animal husbandry took a smaller number of loans because they
mainly reared goats and goats were sold throughout the year.

One of the farmer details who committed suicides

Sunil Sisodia had a family of 6. He and his wife Shiela Devi had 4 children, 3 girls, and a boy.
He had 10 acres of land and was mainly involved in cultivating cash crops like soybean and
cotton. In the last three years, his total expense towards agriculture was about 10 lakhs. His
income from the agriculture output was only 2 lacks.

In the first year, he took a loan of Rs 2 lakhs from Punjab National Bank at 8.5% interest rate and
invested his family savings of Rs 1 lakh to buy agriculture inputs such as cotton and soyabean
seeds, fertilizers and pesticides. Some of this amount also went to pay for the rent of tractor and
agriculture laborer. The total income from the first-year produce was Rs 1.5 lakhs. However, the
total expense made by Sunil was Rs 4.5 lakhs which included his household expenses as well.

While going into the second year, he already had a loan of Rs 2 lacks on him with interest and he
was left with no savings. So, this year he took a loan of Rs 3 lakhs from Shree Shyam NGO for
agricultural purposes at an interest rate of 8%. He also took loan a short-term loan of Rs 1.5 lakh
from a private money lender at an interest rate of 3% monthly for the needs of his household. But
again, there was a drought in the second year which led to the complete destruction of his crops.
He could only manage to get a mere Rs 20,000 from selling his agriculture output.

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In the third year, Sunil’s only son was diagnosed with dengue for which he had to take his son to
the nearest town Khandwa to get admitted to the private hospital. The overall medical expense
was about Rs 50,000 thousand for which he again to loan from the private money lender. The
moneylender also provided the loan of Rs 3 lakhs to Sunil for his personal and agricultural
expenses. He also had to sell 8 acres to land to another farmer for Rs 2 lakhs.

Due to mounting debt and crop loss in the third year as well, he went into depression and hanged
himself.

Mr. Tibrewal is working on ways so that he can curb the debt issues among farmers. The options
available to him are reducing the interest rate or change the loan structure for giving loans, where
the purpose of taking a loan can be modified.

He tried to reduce the interest rate but the response from the farmers was tepid. He didn’t
understand why so many farmers were not applying for the loans. Then he realized that the
farmers who applied for the loan on low-interest-rate were either big farmers or those farmers
who had other sources of income as well.

Questions for Discussion

1. Why did farmers didn’t show much interest in taking a loan at a low-interest rate?
2. Is there any other way to increase the farmer’s income?
3. Why were the suicide cases more prominent among the Rajput farmers as compared to
Bhil community farmers?

About the Author: Anirudh Goel

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I am currently pursuing my postgraduate diploma in rural management from the Institute of
Rural Management Anand. I have an engineering degree in Information Technology post which I
worked in Infosys for 6 years. I want to work towards improving the livelihood of the people
living in rural areas in my home state Uttarakhand.

Exhibit 1

Exhibit 2

Commercial crops are those crops that cannot be used as food and are solely produced for
commercial purposes such as cotton, rubber.
Food Crops examples are wheat, soyabean, paddy, etc.

Exhibit 3

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Exhibit 4

Exhibit 5

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The lesser area under pasture and grazing ground signifies lesser dependency on livestock while
lesser area under inhabitation signifies scattered pattern of the village and low population
density. Diversification in agriculture involves plantation farming and orchard cultivation. The
net cultivated area clearly signifies that there is a high dependency on agriculture. Though the
households have livestock, however, they were mostly used for their own consumption rather
than for trade. The few of them, who were involved in trade, only reared goats as it is an easy
source of liquidation of money.

Exhibit 6

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Exhibit 7

Exhibit 8

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Note: The name of the village, NGO and the individuals mentioned have been changed.

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Teaching Notes:

Case Synopsis:

The case is about to curb the suicide cases among the villagers of the Rampur due to mounting
debt on them. The major issue in the case is that the majority of the farmers have only one source
of income due to which the farmers are more prone to getting trapped into the vicious cycle of
debt. Also, the farmers only focus on the cash crops rather they should focus on horticulture
crops as well.

Course Positioning

The course should guide students towards the issues faced by farmers. They should focus on how
the livelihood of the farmers can be improved.

Learning Objectives

The objective of the case is for the students to focus on the intrinsic problem of improving
livelihood for the farmers rather than on focusing on the extrinsic issue such as providing more
loans or reducing interest rates.

Reading Material

1. They can read the material on doubling farmer's income provided by agriculture ministry
http://agricoop.nic.in/doubling-farmers-income.

2. Capacity building of farmers

https://www.oav.de/iap-42014/artikel-513.html

3. Diversifying the farmers income https://www.thehindubusinessline.com/economy/agri-

business/diversification-key-to-sustainable -farming/article7810690.ece

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Discussion Questions and Analysis

The first thing to understand here is the farming practices of farmers in Rampur. How are they
different from each other? Further analysis can be done by asking if they have other sources of
income and if they do then how is it related to their farming.

From the earlier analysis, we can clearly see the farmers who applied for loans were Rajput
farmers who were already in big debt due to earlier loans and they didn't want to take further
loans just to pay earlier loans.

Hence, the problem in the above case was of farmers suicide due to large debt. However, the
cause for the large debt was the dependency on just one source of income i.e. farming which is
not consistent at all. So, the solution is to diversify the farmers income through capacity building.

Why did farmers didn’t show much interest in taking a loan at a low-interest rate?

There are many institutions that provide loans to the famers such as PSU Banks, Private Banks,
private money lenders, MFIs (Micro Finance Institutions) and few NGO’s. From the case, we
can see that the farmers were taking loans from many financial institutions for different
purposes. However, the case does not mention about the farmer taking loan to pay off other
loans.

Secondly, taking more loans to pay another loan lowers the self-esteem of the farmers. They see
it as a direct attack on their dignity. Farmers were not committing suicides because they didn’t
have food for their children but because they were not able to pay back their loans.

Thirdly, they were not able to trust NGO because they already were having trouble with the other
money lenders. This led to farmers distrusting all the financial institutes who were giving loans.

Why did farmers didn’t show much interest in taking a loan at a low-interest rate?

There are many institutions that provide loans to the farmers such as PSU Banks, Private Banks,
private money lenders, MFIs (Micro Finance Institutions) and few NGOs. From the case, we can
see that the farmers were taking loans from many financial institutions for different purposes.
However, the case does not mention about the farmer taking a loan to pay off other loans.

Secondly, taking more loans to pay another loan lowers the self-esteem of the farmers. They see
it as a direct attack on their dignity. Farmers were not committing suicides because they didn’t
have food for their children but because they were not able to pay back their loans.

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Thirdly, they were not able to trust NGO because they already were having trouble with the other
money lenders. This led to farmers distrusting all the financial institutes who were giving loans.

Is there any other way to increase the farmer’s income?

Most of the government institutes as well as NGOs focus on immediate remedy by giving money
or subsidy to the farmers. However, they do understand that once this money is spent by the
farmer then these farmers will come back to the same condition as they were before receiving all
these loans and subsidies.

The other way of saying this is that all these loans and subsidies makes farmers more dependent
on the government rather than making them self-sufficient.

If we see the whole farm practices per se, then all the work like growing crops, rearing cows for
milk and rearing goats for meat are interlinked with each other. This all leads in reducing the
overall financial risk of the farmers because now he has many sources of income.

But due to the modernization in the farming techniques because of the ever-growing food
demand had led to the mechanization of farming. Therefore, the use of farm animals has reduced
drastically which has concentrated the farmer’s risk to farming.

Hence, they need other sources of income that can complement their farming activities. It can be
value addition of their agriculture produce by sorting and packaging. They can move towards
dairy farming. They can be taught weaving and other capacity building activities that is in
demand in the nearest market.

Note: Please let the students come up with all the different answers. Because every region has its
own opportunities.

Why were the suicide cases more prominent among the Rajput farmers as compared to
Bhil community farmers?

Bhil community farmers were not dependent on only farming. Since, they had small rain-fed
agricultural land, in most of the cases, therefore each family was involved in many different
activities like working as a bounded labourer on the lands of Rajput farmers or at the
construction sites in the cities, and rearing goats for its meat.

However, Rajput farmers were not involved in these activities, therefore it led them to risk all
their energy into farming only. Also, the land of the Rajput farmers was big and irrigated
therefore they used tractors for farming, pumps for irrigation, fertilizers, etc. and all these things
are costly due to which the whole farming activity of Rajput farmers was very costly.
On the contrary, Bhil farmers still used traditional method of farming which was enough for their
own consumption. Hence, they didn’t much loan compared to Rajput farmers.

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