“AN INFLUENCE OF CORPORATES

ON FARMERS IN INDIA”

PROJECT REPORT

MOHAMED ANAS .A (16-UEC-001)

DEPARTMENT OF ECONOMICS

LOYOLA COLLEGE (Autonomous)

CHENNAI

OCTOBER 2018
MOHAMED ANAS.A
16-UEC-001
Department of Economics,
Loyola College (Autonomous),
Chennai – 600 034.

DECLARATION

I hereby declare that the project entitled “AN INFLUENCE OF

CORPORATES ON FARMERS IN INDIA” is the result of the original work

done by me.

Signature of the student

Place: Chennai MOHAMED ANAS.A

Date:
 ACKNOWLEDGEMENT

I thank the ALMIGHTY for all the graces showered on me, throughout

the course of my project.

I place on accord my sincere thanks to Prof. B.BHAGWAN DAS, Head

of the Department of Economics, for providing me with this opportunity.

With deep and profound sense of gratitude I extended my heart full

thanks to my Prof. ELANGO J. PARIMALAM, Department of Economics, for

his timely advice and selfless help rendered right from the beginning of this

project.

I thank Rev. Dr. F. ANDREW S.J, Principal, Loyola College, Chennai for

providing me all the facilities.

I am grateful to all the faculty members of Economics Department for

their encouragement and valuable instructions.

I am deeply grateful and thankful to my parents for their support and

encouragement.

I would also like to thank my friends and library staff member for their

help throughout the project.

MOHAMED ANAS.A
 CONTENT

CHAPTER TITLE PAGE NO

1 INTRODUCTION 1
 LIST OF TABLES

TABLE TITLE PAGE

NO. NO
 LIST OF FIGURES

FIGURE TITLE PAGE

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 CHAPTER – I

INTRODUCTION

Should MNC be allowed to Invest in Agriculture Sector? Private

sector these days has been supporting the nation in various sectors.

But a big question is emerging that whether MNCs should be given

permission to support agriculture sector or not. Let we discuss how

multinational companies and globalization affects agriculture and

farmers in India

 Positive Feedback From other Sectors– Multinational companies

have proved to be good in other sectors like Defense (like TATA,
Ashok Leyland and Reliance is also trying to get involved),
Nuclear sector (deal between French AREVA and L&T),
Banking and many other sectors. So, it can be a good decision
and like other sectors we can hope for positive outcomes.

 Big Part of Population Related to Agriculture – About 50% of

the Indian population is related to agriculture sector. Recently a
report has been released disclosing that 51% of the total people
below poverty line in Rajasthan belong to agriculture to sector.
So they need a proper care.

 Vacuum in Government Policies – After crop damaged in

various parts of the country in the beginning of this year, farmers
saw the clear image of government’s help. In UP, government
 distributed cheques of Rs. 50-70 as compensation to those who
had faced crop failure. So MNCs must be given a chance to
handle this situation. Private companies can do the grievances
and redressed task more efficiently.

 Improve the Technology to Ease Efforts – Introduction of MNCs

in agriculture sector will surely lead to the import and use of
new technology in agriculture and will reduce the human efforts
in agriculture. New advance technology, better funds for
irrigation and better knowledge of farming will obviously help in
development of this sector.

 MNCs Providing Insurance will Overcome Farmer Suicide

Rate – The rate of farmer suicide in many states like UP and
Maharashtra has escalated this year and has been a problem from
long time. If MNCs will provide easy insurance to farmers then
this problem can be solved.

 Globalization has already affected the farm sector in India, as in

many other developing countries, in a range of adverse ways.
The most evident is the squeeze on farmers’ incomes, and the
threat to the viability of cultivation, which has come about
because of rising input costs and falling output prices. This
reflects the combination of reduced subsidy and protection to
farmers in developing countries, and trade liberalization which
exposes these farmers to competition from highly subsidized
production in the developed world. This combination, along with
deflationary policies which have hit rural public expenditure, has
created unprecedented agrarian crisis over much of the
developing world, including in India. However, until now, the
Indian agricultural sector had been relatively spared from the
most extravagant excesses of neoliberal interference, in the form
of the corporatization of agriculture. That reprieve now seems to
be over, as the central government and several state governments
in India are gradually won over by the dubious charms of
contract farming. This is increasingly being presented as the
 great new hope and the way out of the morass in which Indian
agriculture now finds itself, and is being actively promoted by
major international donor agencies as well as by multinational
companies that stand to gain from this process, and has recently
been promoted by the central government as well.

General consequences of globalization on Indian agriculture:

 With the operationalisation of the provisions of the World Trade
Organization, the process of globalization commenced in the
major parts of the world. There has always been an air of
confusion among the members and non-members of the WTO in
assessing the pros and cons of globalization on the health of
their economy. The sector which has created the highest number
of deliberations in the WTO as well as views and counterviews
has been the agriculture, an area of utmost concern for the
developed and the developing world alike. India is no exception
to it. Better say it has been among few countries in the world
spear-heading the campaign against the biased provisions of the
WTO concerning agriculture.
 Following are some positive consequences of globalization on
Indian agriculture.
 A) Positive Consequences-
 1) Availability of modern Agro- technologies:
 There is availability of modern agro technologies in pesticides,
herbicides, and fertilizers as well as new breeds of high yield
crops were employed to increase food production. These
technologies included modern implementations in irrigation
projects, pesticides, synthetic nitrogen fertilizer and improved
crop varieties developed through the conventional, science-
based methods available at the time. Use of High Yielding
Varieties (HYVs) like IR8 a semi-dwarf rice variety. HYVs
significantly outperformed traditional varieties in the presence
of adequate irrigation, pesticides, and fertilizers.
 2) Rise in production and productivity:
 Due to adoption of HYV technology the production of food
grains increased considerably in the country. The production of
wheat has increased from 8.8 million tons in 1965-66 to 184
million tons in 1991-92. The productivity of other food grains
has increased considerably. It was 71% in case of cereals,
104%for wheat and 52% for paddy over the period 1965-66 and
1989-90.Though the food grain production has increased
considerably but the green revolution has no impact on coarse
cereals, pulses and few cash corps. In short the gains of green
revolution have not been shared equally by all the crops.
 3) Growth of National Income-

 Receiving the international market for the agricultural goods of India,

there is an increase in farmer’s agricultural product. New technology,
new seeds, new agriculture practices etc. helped to grow the
agricultural product. From the monetary point of view the share of
agriculture sector in the economy is raised to 14.2% of the GDP
(2010-11).

 4) New areas employment-

 While exporting agricultural products it is necessary to classify the

products, its standardization and processing, packing etc. Therefore,
after LPG the agro allied industries has created employment in
various sector like packing, exporting, standardizing, processing,
transportation and cold storage etc. The industries depending on
agriculture are stored and it made an increase in employments.
Agriculture is the biggest unorganized sector of the Indian economy
accounting for more than 90% share in the total unorganized labour
force. The share of agriculture in total employment stands at 52.1%

 5) Agriculture as a prime moving force-

 The growth of agricultural sector in India has correspondent relation

with industrial growth and national income in India. It is assumed
that 1% increase in the agricultural growth leads to 0.5% increase in
the industrial output and 0.7% increase in the national income in
India. Especially after LPG the agricultural sector in India is
developing rapidly. As a result, the government of India announced
agriculture as the prime moving force of the Indian economy in 2002.
As per World Trade Organization data, global exports and imports of
 agricultural and food products in 2011 stood at $1.66 trillion and
$1.82 trillion respectively. India's share in this is 2.07 per cent and
1.24 per cent respectively.

 6) Rise in the share in trade

 Because of the conditions of WTO all of the countries get the

same opportunities, so there is an increase in the export of
agricultural products. According to data provided by World
Bank, India’s share in exports (goods and services) rose from
0.54%in 1990 to 0.67% within five years after globalization
took place i.e. up to 1999. Indian exports rose by 103% during
the same period.
 7) Growth of Agro exports -
 The prices of agricultural goods are higher in the international
market than Indian markets. If the developed countries reduced
grants, they have to increase in the prices. So there will be
increase in the export in Indian market and if the prices grow,
there will be profit. Agricultural products account for 10.23% of
the total export income of the economy, while agricultural
imports account for just 2.74% of the total imports. Agricultural
exports was 33.54 billion $ in the year 201-13.
 8) Reduction in poverty-
 It is also true that globalization is commonly characterized as
increasing the gap between the rich and the poor, but it is a
matter of looking at poverty in relative terms. India’s prior
concern is to remove poverty, which is worse than death, and if
India makes efforts, globalization can be a key to get rid of it.
Moreover, the percentage of people below the poverty line has
been decreasing progressively, from 36 percent in 1993-94 to
21.9 percent in 2011-12.
 These are some positive consequences of globalization on
Indian agriculture. But as far as a developing country like India
is concerned the negative consequences are proved as more
effective. These are as follows.
 B) Negative Consequences-
 1. Vicious debt trap and farmers suicides-
 There is need to examine each of the causes which have led to
the current crisis in agricultural sector, and analyze the role that
liberalization policies have played. For instance the state of
Andhra Pradesh led to the first ever state level agreement with
the World Bank, which entailed a loan of USD 830 million in
exchange for a series of reforms in his state industry and
government .It has implemented the World Bank liberalization
policies with great enthusiasm and zest and as result the rate of
farmers suicides in the state gone up. The National Sample
Survey Organization (NSSO) Report 2005 indicates that 1 in 2
farm households are in debt and only 10 per cent of the debt was
incurred for non production purposes. Also, 32.7 per cent of farmers
still depend on money lenders. The National Crime Records Bureau
reports that between 1997-2005 1, 56,562 farmers committed suicide.
Nearly 60% of them took place in the 4 progressive states, viz.,
Maharashtra, Andhra Pradesh, Karnataka and Madhya Pradesh.
More than 20 per cent of suicides have taken place in Karnataka.
(Push up, 2007, Kumaraswamy, 2008) Hence, the experience with
liberalization is critical.

 2. Migration of labors-
 For the Indian farmer, who is already paralyzed by low
productivity and lack of postharvest storage facilities has
resulted in heavy loss of produce and revenue. It is only because
of low tariff in imports due to liberalized import duties which
came as a bombshell. The domestic farmer could not stand the
competitiveness of international market, which has resulted in
migration of labor from agriculture to other industrial activities.
 3. Lower income of rural farmers
 According to Nobel Prize-winning economist Joseph Stiglitz,
Trade agreements now forbid most subsidies excepted for
agricultural goods. This depresses incomes of those farmers in
the developing countries who do not get subsidies. And since 70
 per cent of those in the developing countries depend directly or
indirectly on agriculture, this means that the incomes of the
developing countries are depressed. But by whatever standard
one uses, today’s international trading regime is unfair to
developing countries. He also pointed out the average European
cow gets a subsidy of $ 2 a day (the World Bank measure of
poverty); more than half the people in the developing world live
on less than that. It appears that it is better to be a cow in Europe
than to be a poor person in a developing country
 4) Lessening international competitiveness –
 In India 60% of population depend on agriculture. This pressure
on agriculture is increasing day by day because of the increasing
population. Because of marginal land holding the production
cost of Indian farmers is higher as well as the quality and
standardization of agro produce is much neglected. Along with
this, the curtailment in subsidies and grants has weakened the
agricultural sector. On the contrary before the reduction in
grants by WTO, developed countries had distributed grants on
large scale. They had grown the amount of the grants on large
scales in agriculture during 1988-1994. So they have not to face
many difficulties if there is a reduction in grants. On this
background the farmers are not in a position to compete
international market.
 5) Abnormal hike in Fertilizers and Pesticide prices-
 Immediately after globalization Indian rupee was devaluate by
25% and Indian crops became very cheap and attractive in the
global market, which led Indian farmer for export and
encouraged them to shift from growing a mixture of traditional
crops to export oriented 'cash crops' like chilli, cotton and
tobacco. These need far more inputs of pesticides, fertilizers and
water than the traditional crops require. It automatically
increased Fertilizer and pesticide prices by 300%.
 6) Electricity tariffs have also been increased-
 Pre liberalization, subsidized electricity policy helped farmers to
keep the costs of production low. The electricity costs increased
dramatically when farmers turned to the cultivation of cash
crops, which needed more water, hence, more water pumps were
needed and there was higher consumption of electricity. Andhra
Pradesh being traditionally drought prone, the situation further
worsened. In Andhra Pradesh tariff was increased 5 times
between 1998 and 2003. This caused huge, unsustainable losses
for the Andhra Pradesh State Electricity Board, so it increased
the electricity tariff. The fact that only 39% of India's cultivable
land is irrigated makes cultivation of cash crops largely
unviable, but export oriented liberalization policies and seed
companies looking for profits continue to push farmers to the
wall.
 7) Price crash-
 As per reforms of WTO, Indian government removed import
tariffs and duties. Earlier these were working as cushion to
protect and encourage domestic producers. By 2001, India
completely removed restrictions on imports of almost 1,500
items including food. As a result, cheap imports flooded the
market, pushing prices of crops like cotton and pepper down. As
a result, most of the farmers committing suicides in Maharashtra
were concentrated in the cotton belt till 2003 (after which paddy
farmers followed the suicide trend). Similarly, Kerala, which is
world renowned for pepper, has suffered as a result of 0% duty
on imports of pepper from SAARC countries. Pepper, which
sold at Rs.27,000 a quintal in 1998, crashed to Rs.5000 in 2004,
a decline of 81%.
 8) Fall in agricultural employment-
 In 1951, agriculture provided employment to 72 per cent of the
population and contributed 59 per cent of the gross domestic
product. However, by 2001 the population depending upon
agriculture came to 58 per cent whereas the share of agriculture
in the GDP went down drastically to 24 per cent and further to
 22 per cent in 2006-07. This has resulted in a lowering the per
capita income of the farmers and increasing the rural
indebtedness.
What is the condition of farmers in India?

1. Money Lenders still play a major role for agriculture credit

where the interest paid to them will be more than profit that
one can earn from cultivated crops.
2. MNREGA Effect : It is very difficult to get labors after
MNREGA . If some one talks about the de-merits of
MNREGA is adjudged as anti-poor. But the reality is
MNREGA ruined agriculture with labor shortages and the
schema is anti-agriculture. Instead the government can enroll
people under MNREGA and give them 100 days of wage and
allow them to work in agriculture.
3. Productivity price : The crop price is inversely proportional
to productivity. If the productivity is more then the price will
be less and vice versa.
4. Good rainfall, good productivity and good prices never ever
come together. So the income of the farmers will be either
marginal or no profit or loss.
5. Only the large farmers can get used of machines and get
good productivity with less production cost.
6. Now a days the cost of paddy cultivation is same as the final
output . Only the paddy grasses is profit of farmers which they
can use it as fodder for cattle.
7. Crops will be destroyed by too much of rainfall or drought
or if everything is good and productivity is more then the price
will be less.
8. Urban consumers who used to get elite media attention will
protest if the food prices goes up but they will not understand
the problems faced by the farmers.
9. Cost of tomato : 100 per/kg is a breaking news. Tomato 1
per/kg is no news .
10. Middlemen : These are the people who earn by sucking the
farmers blood. We used to sell for example onion 10 rupees
 s/kg but the same i get in Bangalore for 50 rupees/kg for the
most the times.
11. Every farmer wants their children to move out of agriculture
because they know the difficulty of agriculture.

CHAPTER – II

REVIEW OF LITERATURE

The farmers' suicides in India, also known as the agrarian crisis,

are the phenomenon of suicides among Indian farmers from 1990 to
the present. It has been exacerbated by the inability to repay
growing debt, often taken from local moneylenders and microcredit
banks to pay for high priced high yield seeds marketed by MNCs and
the non-implementation of mininimum support prices (MSP) by state
governments. During the duration from 1998 to 2018, it has resulted
in the suicides of 300,000 farmers in the country, often by
drinking pesticides themselves.1
Indian government has not published data on farmer suicides since
2015. National Crime Records Bureau director Kumar said that the
data is under scrutiny and the report for 2016 is likely to be published
later.2
Starting in the 1990s, agriculture in India has declined at a devastating
rate. This has had calamitous impact on the livelihoods associated
with agriculture. symptoms of this agrarian distress, unprecedented in
post-Independent India, is a high rate of suicides amongst farmers.

1 Sainath, P (2 July 2018). "India's agrarian crisis has gone beyond the agrarian".

2 Dey, Abhishek . "India has not published data on farmer suicides for the last two years".
The crisis is characterized by low institutionalized credit to small
farmers.3

According to P. Senath, a leading Indian journalist who reports on the

rural India and its unprecedented economic crisis, for the first time as

per 2011 Census of India urban India added more to its population

than rural India. This implies that millions of people earlier engaged

in agriculture are roaming around the India in "footloose migration"

search for daily wages. This points to the destruction of livelihoods in

the predominantly agrarian rural India.4

In 2009, the International Museum of Women included an

examination of the impact of farmers' suicides on the lives of the
farmers' wives and children in their exhibition Economica: Women
and the Global Economy. Their slideshow "Growing Debt" and
accompanying essay by curator Masum Momaya entitled "Money of
Her Own" showed how many widows were left with the burden of
their husbands' debts, and were forced to work as indentured servants
to repay the debt. The widows were also unlikely to remarry, because
other men in the community were unwilling to take on the widows'
debts for themselves.5

3 "Farming and its crisis". People's Archive of rural India.

4 Sainath, P. (25 September 2011). "Census findings point to decade of rural distress"

5"Marriage and Money". Economica: Women and the Global Economy. October 2009.
Archived from the original on 19 February 2010
The State government of Maharashtra, one of the most farmer suicide
affected states, passed the Money Lending (Regulation) Act, 2008 to
regulate all private money lending to farmers. The bill set maximum
not legally allowed interest rates on any loans to farmers, setting it to
be slightly above the money lending rate by Reserve Bank of India,
and it also covered pending loans6

The high suicide rates in southern states of India may be, suggest
Patel el al., in part because of social acceptance of suicide as a method
to deal with difficulties. Suicide ideation among surviving family
members of farmers' suicide victims is another worry.7

In 2012, there were 745 farmer suicides in Uttar Pradesh, a state with
an estimated population of 205.43 million8

The National Crime Records Bureau of India reported in its 2012

annual report, that 135,445 people committed suicide in India, of
which 13,755 were farmers (11.2%)9

The high land taxes of the 1870s, payable in cash regardless of the
effects of frequent famines on farm output or productivity, combined
with colonial protection of usury, money lenders and landowner

6Maharashtra Money-Lending (Regulation) Ordinance, 2008 with Central Government for

President’s approval Mumbai (February 2009), Ministry of Parliamentary Affair

7 Patel, Vikram; et al. (2012-06-23). "Suicide mortality in India: a nationally representative

survey".

8 "Farmers' suicides in India not due to Bt cotton: IFFRI". Mint. 11 November 2008.

9 National Crime Reports Bureau, ADSI Report Annual – 2012 Archived 10 August 2013 at
the Wayback Machine. Government of India,
rights, contributed to widespread penury and frustration among cotton
and other farmers, ultimately leading to the Deccan Riots of 1875-
1877.10

Kerala, in 2012, amended the Kerala Farmers' Debt Relief

Commission Act, 2006 to extend benefits to all distressed farmers
with loans through 2011. It cited continuing farmer suicides as a
motivation11

A group to study the Farmers Suicides was also constituted by the

Government of Karnataka under the Chairmanship of Dr Veeresh,
Former Vice-Chancellor of Agricultural University and Prof
Deshpande as member.12

10 Kranton and Swamy (1999), The hazards of piecemeal reform: British civil courts and the
credit market in colonial India, Journal of Development Economics, Vol. 58, pp. 1–28
11 THE KERALA FARMERS’ DEBT RELIEF COMMISSION (AMENDMENT) BILL,
2012 Bill 72, Gazette of Enacted Bills, Government of Kerala

12 Deshpande (2002)