The nation of India had an estimated population of nearly 1.4 billion people as of 2020, and the world’s third largest economy in Purchasing Power Parity (PPP) terms, trailing only the United States and China in that category. According to World Bank data, the Indian agricultural sector accounted for 16 percent of national Gross Domestic Product (GDP) as of 2019, and the sector provides employment for 41 percent of the nation’s labor force.
As of the last agricultural census compiled in India for 2015-16, there were an estimated 145 million distinct farms in the country, with an average farm size of just over one hectare (2.7 acres). This figure represents a nearly 50 percent decline in average farm size in just the last three decades, and largely mirrors the increase in rural population in India over the same period.
Beginning in the 1970’s, most Indian farmers adopted the new high-yielding wheat and rice varieties that had been developed by Dr. Norman Borlaug, earning the Iowa-born crop scientist the Nobel Peace Prize in 1970. Along with improved access to irrigation and commercial fertilizer, this technology helped the country’s farmers to increase their agricultural production by leaps and bounds. According to FAO data, between 1970 and 2019, total production of rice and wheat by Indian farmers increased by more than 232 percent, even as average farm size declined over the same period. The magnitude of these gains have allowed India to become self-sufficient in their production of a number of staple commodities, including wheat and rice, in recent decades, despite their booming population.
However, Indian farmers, especially smallholder farmers in certain southern states such as Andhra Pradesh and Tamil Nadu, have fared badly in recent decades. There is significant variability in farmers’ average income by region, with farm households in Punjab (northern India) earning the equivalent of more than $2900 per year while farm households in Bihar (eastern India) were earning less than $600 per year. In addition, about 70 percent of Indian farmers are cultivating the land as tenants, not as landowners.
Indian farmers have had a substantial safety net to support their income in recent decades, in particular providing a minimum price support to farmers growing rice and wheat by guaranteeing purchase of grain for distribution to low income households. Up to one-third of India’s wheat and 15 percent of its rice output are bought by the government each year. That grain is then distributed to Fair Price Shops, where ration card holders can buy subsidized food. The effort is one of the world’s largest social security programs and 810 million Indians are eligible to purchase the food that it provides.
Despite this system, smallholder farmers still face problems with the high cost of credit, and in some regions, access to adequate water for irrigation purposes. Research has shown that there is differential access to and cost of institutional credit in India, based on both the size of the farming operation and the caste of the household involved. While they can borrow from accredited banks at the beginning of the season to purchase inputs at reasonable interest rates, many are forced to borrow from moneylenders at very high rates (up to 50 percent) during the rest of the year to help get them through to harvest. The most heavily indebted farm households are in the same southern states described above, with Andhra Pradesh checking at at 93 percent of all such households in debt as of 2018, and Telangana just behind at 89 percent. In some cases, farmers respond to stress caused by their heavy indebtedness by committing suicide--a joint study by several Indian universities found that between 2000 and 2015, more than 16,000 Indian farmers and farmworkers took such steps.
In India, neither the national government nor the various state governments have effective laws in place restricting use of groundwater, so large farming operations have little incentive to use this resource efficiently, which sometimes disadvantage their smaller neighbors. The national government has encouraged smallholder farmers to diversify their operations by growing fruits and vegetables in addition to staple crops, but those crops often require more irrigation water than they can obtain.
In September 2020, the government led by Prime Minister Narendra Modi, who heads the right-wing Bharatiya Janata Party (BJP), enacted new policies that had been rushed through their parliament which governed the marketing, pricing, and storage of agricultural commodities, allowing private buyers to undertake these functions that had previously been reserved for government agencies in many areas of the country. The government was hoping to reduce the cost burden of the price support system, which often ends up procuring around 15 percent of both the wheat and rice crops, costing tens of billions of dollars every year.
The new laws prompted farmer fears that the next steps would include ending the government procurement of grains and leave the markets entirely in private control. Protests in several Indian states were launched almost immediately, and persist through the present. The initial protests occurred out in the countryside, but starting in late November of last year, tens of thousands of farmers marched to New Delhi, the Indian capital, to raise the visibility of their efforts. Protests against the new laws have also occurred in other countries, such as the United Kingdom and the United States, both from the Indian emigre community and certain non-Indian celebrities, such as the pop singer Rihanna and youth climate activist Greta Thunberg. In January 2021, the Indian Supreme Court suspended the new laws, but farmers continue to demand complete repeal of the new laws as well as enhancement of the MSP system, which currently has minimum prices for 23 different commodities but only regularly procures wheat and rice for public distribution.
