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Tuesday, Sep 19, 2006

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States - Kerala
Special problems, special solutions

K.G. Kumar

Kerala economy has certain special characteristics that make it particularly vulnerable to external influences.

The region-specific and differentiated approach to Kerala's agrarian crisis, announced by Union Minister for Food and Agriculture Sharad Pawar ought to be welcomed.

Last week, amidst all the political action that the Union Minister was involved in during his visit to Kerala, the principal focus of his trip remained the plight of the farm sector in the State. With its manufacturing sector not in the most robust of conditions, Kerala's agriculture sector has long supported its State Domestic Product and growth in the larger economy.

Thus the persistence of suicides by debt-stricken farmers - especially in the northern districts of Palakkad and Wayanad as well as in the more central districts of Idukki and Alappuzha - has led to the charge that the State is in the grips of a new, modern-day agrarian crisis.

According to one report, in the last five years or so, more than 500 farmers have committed suicide in the Wayanad region alone. Another more alarmist claim is that as many as 1,570 farmers who had availed themselves of loans from co-operative societies had committed suicide in the past couple of years. The total amount of loan taken amounted to Rs 5.3 crore.


In its Draft Approach to the Eleventh Plan, the State Planning Board recognises the problem in no uncertain terms: "The State is afflicted by a serious agrarian crisis, with the peasantry in at least five districts facing acute distress, and with a large number of suicides in at least one of them, Wyanad. The proximate causes behind this distress are: the price-crashes in a number of cash crops in the world market, to which the peasants have become exposed with trade liberalisation; the downgrading of the State-run commodity purchase and marketing boards and the subsequent cornering of the purchases of cash crops by a small number of trans-national companies (which pay the growers much lower prices than the global price warrants); the competition from Sri Lanka, and third countries using the Sri Lanka route, in crops such as tea and pepper under the Indo-Sri Lanka Free Trade Agreement; and the rise in the prices of a range of inputs, including credit, owing to the withdrawal of subsidies, financial liberalization and other measures of liberal reforms."


Though it might be rather facile to lay the entire blame for the current agrarian crisis on the doors of "liberalisation", the fact remains that the Kerala economy has certain special characteristics that make it particularly vulnerable to external influences. This is something that Mr Pawar recognised.

He told newspersons in Thiruvananthapuram that Kerala's demand for assistance in the farm sector would be considered exclusively as its situation was different from that in other States. He stressed that the Centre was aware of the frequent occurrences of natural calamities in the State, which only added to the problems being faced by marginal and sub-marginal farmers.

Rehabilitation and revival measures would, therefore, concentrate on six areas: debt relief, watershed development, irrigation, horticulture development, rainwater harvesting and animal husbandry.

The State Government, which had earlier asked for Rs 3,412 crore to partly resolve the crisis in the agricultural sector, has now demanded an additional Rs 2,300 crore as aid. But, as Mr Pawar rightly pointed out, it is not always economically prudent to apply a universal Band-Aid solution to agrarian problems.

As Mr Pawar explained, Kerala's farmers face problems that are fundamentally different from those confronting farmers in Maharashtra, Andhra Pradesh and Karnataka. In those States, the failure of one crop can be compensated with aid from the Union Government.

But such one-time fiscal patches may not do for Kerala. In its plantation sector, for instance, where a cash crop failure would be catastrophic for farmers, large doses of investment and long periods of time would be needed for any meaningful revival.

Such a region-specific and differentiated approach to development problems ought to be welcomed. It is now up to the State Government to cash in on the relief and rehabilitation package that the Union Government will announce in a month.

The writer can be contacted at

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