Rethinking farm loans in India

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Editor's note: Indian agriculture is fragmented; there are too many individuals doing the same thing, growing the same crop, facing similar problems, dying the same death. Farmer welfare policies in the country have been targeted at individual farmers, but the condition on the ground seems to have only worsened. So, what do you do? Well, to deal with a problem at a massive scale, sometimes one needs to zoom out. Farmers’ indebtedness, which is the root cause of the deepening agrarian crisis in India, is perhaps one such problem. Food production numbers aside, Indian agriculture is at its lowest point today and the Indian farmer, more vulnerable than ever. The unit economics don’t favour individual farmers—for over two-thirds of them, agriculture is a loss-making proposition. The average landholding in India has halved in the past five decades and stands at 1.08 hectares, according to the Agriculture Census 2015-16, and 68% of the farmers own less than 1 hectare. According to the All India Rural Financial Inclusion Survey, an average agricultural household made Rs 1.07 lakh (~$1,500) a year as of 2016-17. It shows that …