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Dadra and Nagar Haveli, Delhi and Pondicherry (Mishra 2006, pp.1566-1569).
Prof. V.M. Rao, who has provided an incisive overview of the studies on the
aforesaid five severely affected states in the Reddy-Mishra (2009) volume,
concludes that a common and impliedly a dominating factor explaining suicides
is indebtedness. Rao’s observations are worth quoting:
“As may be expected, suicides usually have many precipitating factors.
But, the state studies included in this part clearly bring out the role
played by farmers’ distress in the case of suicides by farmers. While the
situations in these states have their own specificities, a commonality
among them is the growing pressure of indebtedness, rising costs, and
declining returns. Another commonality is the inadequate policy support
to farmers precisely when their need for support was most pressing.
Even institutions lending finance remained indifferent to the farmers’
woes. One would legitimately expect these institutions to remain alert to
the financial conditions of their borrowers and to intervene before the
borrower reaches the point of crisis. It is these two factors – inadequate
policy support and unsympathetic and unhelpful institutional lenders
– that need a serious look while preparing a road map for the future”
(Rao 2009, p.113).
In the second half of the 1990s and thereafter, banks began to face
excess liquidity as a result of their reluctance to lend partly because of weak
demand but mainly because of added risk aversions originating from prudential
norms prescribed under the financial sector reforms regime. The RBI no doubt
took various measures after 2000 “to improve the credit delivery mechanism”
(RBI 2004, p.155), but banks initially showed lukewarm response to these
measures. The central bank was seen bemoaning thus:
“Consequent upon the deregulation of interest rates and the
significant reduction in the statutory pre-emptions, there was
an expectation that enhanced credit flow to the needy would be
facilitated. In contrast to these expectations, banks continued
to show a marked preference for investments in Government
securities” [(RBI (2004):
Report on Currency and Finance 2003-
04
, p.155)].
As a result, banks’ credit-deposit ratios remained unduly low and their
profitability suffered a setback. Subsequently, apart from moral suasion from
authorities and pressure to improve profitability, social pressures induced
banks to expand their credit base. As alluded to in Chapter 3, after 2000, the
inadequacy of agricultural credit became a live socio-economic issue and the
