People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 03

January 21, 2007



A Political Victory Against Neo-Liberalism


P Krishnaprasad


PASSED on December 29, 2006, the Kerala Farmers’ Debt Relief Commission Bill is a significant act in the history of Kerala legislature assembly. The bill, with many radical and socially relevant clauses, is a product of relentless struggles by the politically conscious peasantry of Kerala. At the same time by enacting this historic bill, the Left and Democratic Front government of Kerala has scored a decisive political victory against the forces and ideology of neo-liberalism. 


While the agrarian sector in India is facing the most severe crisis since independence due to the ‘neo-liberal reforms,’ this legislation holds the State as responsible for it as well as responsible for overcoming it. It also deals a blow to the ‘No Alternative to the Neo-Liberal Path of Development’ ideology. The significance of this legislation in the fight against imperialist globalisation is that, for the first time in India’s history, there will be a commission with the power to write off the liabilities of debt ridden farmers.




The suicides by debt-ridden farmers are a comparatively new phenomenon. The agriculture sector has been the worst victim of the widening and deepening of neo-liberal ‘reforms’ that have pushed down the prices of agro products, the raw materials for modern agro-industries, in a bid to augment the profit of multinationals and domestic monopolies dominating the agro-industries sector. A 2003 study came to the conclusion that due to the crash in the prices of agro products, farm households all over the country were annually losing Rs 1,36,000 crore while Kerala farmers were losing more than Rs 7,000 crore. This means a drastic fall in the income of farm households and pauperisation of the peasantry. At the same time, the gravity of the crisis facing Indian agriculture is becoming all the more severe as the ‘reforms’ end up with sharp cuts in subsidies and the state’s large-scale withdrawal from public investment in agriculture. 


It is in this situation that the farm households’ debt liabilities are growing and getting unmanageable, pushing them ever deeper into the mire of poverty. The ruling classes, implementing these ‘reforms’ with a vengeance, are responsible for the situation. 


Sharad Pawar, the union agriculture minister, recently stated in parliament that, due to indebtedness, 1,36,324 farmers have committed suicide in India since 1995. As for Kerala, more than 1500 farmers’ suicides were reported since 1999. The maximum number of suicides in Kerala took place in Wayanad district where the major crops (coffee and pepper) have suffered severe price falls. According to official data there were 321 suicides in this district, but the real number must be above 500.


These circumstances led to an intensification of farmers’ struggles in Wayanad and other parts of Kerala, with more and more farmers uniting against the ‘reforms’ contributing to the NDA’s defeat in the 2004 Lok Sabha elections. The same unity also led to the LDF victory in the May 2006 assembly elections in Kerala.


However, during its past two and a half years, the United Progressive Alliance (UPA) government has not reversed these neo-liberal policies that have caused this deep agrarian crisis in our country. Instead, for the 31 districts where maximum suicides have been reported, the actual amount of debt relief in its ‘Vidharba model’ packages is less than 10 percent. It shows that the Congress(I) led UPA government is only interested in mollifying the farmers and thus escaping their wrath by giving them some paltry relief, instead of evolving a fundamental solution to the ever deepening agrarian crisis in our country.




But the LDF government that came to power in Kerala just seven months back has taken many steps to support and protect the crisis ridden peasant families in the state. In its first cabinet meeting itself, the government decided to write off the debts owed by the farmers who have committed suicide. Also, while the erstwhile UDF government has recognised only 218 farmers’ suicides in a bid to hide the truth, the LDF government has ordered for fresh estimation in each revenue district. So far, 591 farming families have been awarded compensations of Rs 50,000 each. The process of writing off their debt liabilities is on and the LDF government has announced a moratorium on repayment of crop loans for one year. Another major decision is to provide crop loans up to Rs 50,000 at the lowered interest rate of 5.5 percent and crop loans up to Rs one lakh at 6.5 percent.


By pressurising the union government, the LDF government has fetched Rs 764 crore as special assistance for three districts, viz Wayanad, Palakkad and Kasargod, most affected by the crisis. Because of this special assistance, coupled with 50 percent contribution by the state government, all overdue crop loans as on July 1, 2006 in the said districts have been taken over by the government irrespective of the amount. This covers loans extended by the scheduled and nationalised banks. The government announced Rs 850 per quintal as minimum support price for paddy and procured paddy immediately after the harvest. Another major decision was to establish a food processing park over one thousand acres of land in Wayanad district and giving topmost priority to developing the agro-industries sector in the state. 


It was in continuation of such steps to provide relief to the peasantry that the law to establish a farmers debt relief commission was enacted.


When the Achuthanandan government, in its first cabinet meeting, decided to write off the debts of the households where farmers have committed suicide, the question the opposition raised was: Do farmers have to commit suicide to get their debts written off? The debt relief commission bill, with the power to write off the debt liability of peasant households, is a befitting reply to this question. By enacting this law, the LDF government has reiterated its creed to support and protect the farming community whose members --- not for any faults of theirs --- have been hurled into the whirlpool of price crashes, debt liabilities, pauperisation and suicides. 


After it was introduced in the assembly on October 26, the draft bill was sent to the select committee that held 9 public sittings all over the state and thousands of people participated therein. The committee considered hundreds of recommendations from the common public, leaders of peasant organisations, legal experts, agricultural experts, people’s representatives etc. It deserves appreciation for preparing the final bill by December 21, within the shortest period and in a most democratic manner. The assembly passed the bill by holding a special session on December 27 to 29. 




Apart from agricultural workers, farmers owning up to 4 hectares of land and having an annual income up to Rs 2 lakh will be eligible for benefits under the act. It will also cover the lease farmers and those engaged in vegetable cultivation, honeybee rearing, poultry, fishing, cattle rearing etc.


It has for long been pointed out that, under compelling circumstances, farmers have to take loans for consumption purposes also, like medical treatment, education, house construction, marriages etc, and therefore relief should be extended on such loans also. Now the Kerala act covers, apart from crop loans, all consumption loans of farmers, except for those for luxurious or commercial purposes. This is an example of the radical nature of the act and of the deep commitment of the Left and democratic forces towards the peasantry.


Under the act, the debt relief commission will have the power to recommend to the government to announce one district or several districts, or crops, as distress affected. This will be in accordance with the fixed guidelines and may include price crash, crop diseases, natural calamities, drought etc as criteria. It also has the power to declare a particular region or farm as distressed.


Further, the bill covers all credit giving institutions and individuals except the State Bank of India, its subsidiary banks, or any other nationalised and scheduled bank, defined in the bill as an institutional creditors. The commission does have the power to adjudicate the dispute between farmers and creditors including service cooperative banks, state agricultural development bank, private credit institutions and individuals, and to pass awards that will be binding on both parties. According to clause 5, sub-clause 4, such an award will be final and cannot be questioned in any court of law. According to clause 5, sub-clause 5, the commission’s award will be executed just as a decree of a civil court is executed as per the civil procedure code of 1908.


The commission has the power to fix a fair rate of interest and an appropriate level of debt in case of creditors other than institutional creditors, by examining the petition submitted by a farmer. The commission has also the power to enter into negotiations with the creditors for loan waiver, interest rate relief, loan rescheduling or loan moratorium for the farmers of the distress affected areas. But before it passes an award, it will provide to creditors an opportunity to place their opinion before the commission.


The commission has the power to recommend to the government to take over the debt, in entirety or in part, and exonerate the farmers from repayment.




In its updated budget of 2006-07, the LDF government has approved Rs 100 crore for providing relief to farmers as per the awards passed by the debt relief commission. The commission’s tenure has been fixed at 3 years but the government can extend it further. The LDF government is committed to bear the financial responsibility for providing debt relief to farmers by allocating for it more funds in the coming state budgets. It would raise resources through taxes and other ways and by pressing the union government to allocate funds for the same. 


A majority of the farmers who committed suicide due to financial liabilities were poor/middle peasants or agricultural labourers. The average debt liability of the 321 farmers whose suicides were officially recognised in Wayanad district, is a mere Rs 35,000 per head. In view of this fact, the Kerala act provides maximum relief to the poor and middle peasants as well as agricultural labourers. According to the concerned clause, 75 percent of the debt could be written off if the amount arrived at after a settlement is Rs 50,000 or below. If the amount arrived at after a settlement is above Rs 50,000, the relief provided will be 50 percent or Rs one lakh, whichever is less. 


However, the Kerala farmers’ debt relief commission does not cover the State Bank of India, its subsidiary banks or any nationalised or scheduled bank, simply because the state assembly cannot enact laws to control an institution functioning as per an act passed by the parliament. 


The opposition’s campaign in Kerala seeks to exploit this very limitation. But, naturally, its position is untenable. It should rather ask the Congress(I) led UPA government at the centre to take the needed steps. Taking the Kerala debt relief commission as a model, the UPA government may create a national level farmers’ debt relief commission. The Congress(I) has to tall the people whether it is ready to initiate such a step.


It was a negative stand on part of the opposition in Kerala assembly when it walked out of the house after placing note of dissent saying “the commission has no power to adjudicate and pass awards.” The note was factually wrong. The opposition’s attempts to malign this highly progressive debt relief law as trivial and a hoax is ridiculous and bound to boomerang. It will further isolate the Congress(I) led front from the peasantry. 




A few years ago, the general consciousness of the Kerala society was reflected in the question: Is it practical to write off farmers’ debts? Under the leadership of the Left and democratic forces, the peasant movement engaged in relentless struggles and has been successful in radicalising the mass consciousness. This was what brought the LDF back to power. Now, faithfully upholding the tradition of the first communist ministry led by late Comrade E M S Namboodiripad, which introduced the Kerala Land Reforms Act of 1959, the present LDF government has enacted this bill as a step to strengthen the resistance against neo-liberalism. 


And now, experiencing the hostility of the neo-liberal ‘reforms,’ the peasants all over India, including the Vidarbha region of Maharashtra, may look forward to Kerala and its Left leadership with confidence and pride. The enactment of Kerala farmers’ debt relief commission bill will definitely boost and empower the peasant militancy at the national level, in its bid to reverse the neo-liberal ‘reforms’ that are behind this deep crisis facing our agriculture on which 65 percent of our people depend upon for survival.


(P Krishnaprasad is a member of the Central Kisan Committee of AIKS and an MLA in Kerala.)