Poor Peasants in the 1990s?


It is well known that reliance on family labour increases as one goes down the ladder of land holding towards the very bottom. At the top of the pyramid are the large farms, entirely employing wage labour. But a large number of peasants operate small plots of land, either owned or obtained through an active land-lease market. What may have happened to the livelihoods of these poor peasants in the 1990s? JNU economists, Abhijit Sen, Jayati Ghosh and C P Chandrasekhar have mentioned distress in the accounts, but, we may ask, of what kind? Abhijit Sen plugs in a commercialization variable and finds it statistically significant! Years ago, his colleague Krishna Bharadwaj showed that households operating small plots of land, either owned or leased, tend to, or more correctly, are driven out of sheer struggle for survival, to cultivate the land intensively with the use of family labour in order to extract the maximum yield possible. She demonstrated an inverse relation between the size of holding and the yield per acre when all crops were taken into account. (The latter caveat is often missed by many of her latter-day critics. Like Nirmal Chandra).

Now, the choice of the mix of crops for cultivation and the intensity of cropping depends on the quality of land, the ecological state, the access to water, the availability of credit, etc.  Use of family labour to improve the drainage facilities or the access to irrigation will be a viable option only with a certain security of tenure, and that perhaps accounts for the success of West Bengal agriculture, post-Operation Barga. Like Amit Bhaduri, we too  reject the neo-classical way of viewing exchange through the market in terms of the “gains from trade”, and specialization in production in terms of “comparative advantage” in the case of the poor peasantry. Small peasants are involved in involuntary exchange in the market for agricultural commodities in cycles of post-harvest distress sale at abysmally low prices and pre-harvest purchase at sky-high prices. Bhaduri had dubbed the nature of the usually large market involvement of poor peasants as “forced commerce”. The idea is of poor peasants caught up in the commercial network of indebtedness largely through being forced to take loans at implicit usurious rates of interest to survive from one harvest to the next. Extraction of the agricultural surplus in the case of indebtedness may take the form of under-valuation of the standing crop as collateral. Inability to service the debt takes the form of hypothecation of “assets” like land or future labour services. Defaults pose a threat to livelihoods, and may lead to ruination and the desperate search for alternative livelihoods. And, behind the apparently capitalist accounting method of the price equation for say paddy, is the Indian State, manipulating the terms of trade through administered pricing of the inputs and the outputs. Visible only to those Indian economists who at least scratch the surface, are the merchants, and the landlords expropriating the surpluses, gained from higher prices of the outputs and lower prices, through subsidies, of the inputs. Indeed, the poor peasants may not even be getting the imputed market wage rate. In Class Struggles in France, 1848 to 1850, Marx writes:

‘‘...the French peasant cedes to the capitalist, in the form of interest on mortgages encumbering the soil and in the form of interest on the advances made by the usurer without mortgages, not only rent, not only the industrial profit, in a word, not only the whole net profit, but even a part of the wages, and therefore he has sunk to the level of the Irish tenant farmer —all under the pretence of being a private proprietor.



...It can be seen that exploitation differs only in form from the exploitation of the industrial proletariat. The exploiter is the same: capital.’’

And, in The Eighteenth Brumaire of Louis Bonaparte (1850). Marx writes :

‘‘The small holding of the peasant is now only the pretext that allows the capitalist to draw profits, interest and rent from the soil, while leaving it to the tiller of the soil himself to see how he can extract wages.’’

The poor peasant family is the economic unit. The allocation of labour of each family member is dictated by the compulsion of survival, and here, need not be directly controlled by the exploiters. But, as Amit Bhaduri has asked elsewhere, what may be the macroeconomic impact of the transfer of “assets” like land by the defaulting poor peasants? On the one hand, if the expropriated land is then consolidated and cultivated along capitalistic lines with wage labour, opportunities for employment arise. But the labour input per acre of land thrown out when the poor peasant is evicted will be more than the wage labour per acre of land absorbed. Hence, the net labour absorption will be negative. Of course, the poor peasants who are absorbed as landless agrarian labourers may get a better income, so some peasant families may gain while others lose. In the 1990s, with lesser job opportunities in the non-agricultural rural economy and with a crisis in the institutional rural credit system, it is unlikely that the evicted peasants who do not find adequate employment as landless agrarian labourers will find adequate work outside agriculture in rural India.



Private Investment in



Food-grain and non-food agricultural commodity procurement prices (Rs quintal) have been increasing faster in the 1990s than in the 1980s. It may be worth examining how far the change in the agricultural (and food-grain) relative price has come about due to ruling class coalition politics, rather than the SAP agenda of trade and industrial policy liberalization. Also, though public investment in agriculture (as a proportion of sectoral GDP) is lower in the 1990s, private investment in agriculture has correspondingly been higher. The complementarity of private investment in agriculture with public investment in irrigation, power and other infrastructure related investment might be quite important. What then explains the growth of the private investment rate in Indian agriculture in the 1990s, if public investment slackened? Indeed, paradoxically the rate of growth of agricultural output in the 1990s, compared with that of the 1980s, has considerably slowed down. Can we then say that the efficiency of agriculture in terms of the incremental private capital-output ratio declined because of a slackening of public investment? If so, then private investment-led growth has at least so far been a failure, and will continue to be so in the absence of complementary public investment. Can we say then that private investment-led growth for the agricultural sector may not be feasible for a country like India, unless the state is willing to provide the complementary investment requirements? It cannot be the case that agricultural private investment has a fairly long gestation period and that it is a matter of time before the growth of agricultural output picks up. This points to the importance of development expenditure, at least in agriculture, if a private investment-led growth process is to ‘trickle down’, at least in rural India.