Peasant classes, farm incomes and rural indebtedness : an analysis of household production data from two states

The crisis and stagnation in Indian agriculture have persisted for \nover a decade and are not showing any signs of reversal. Falling real \nproduct prices faced by primary commodity producers have been one of \nthe central causes for escalating farm indebtedness. The gradual \nshrinkage of formal credit institutions in rural areas has simultaneously \ncaused increasing dominance of private players in the credit market, \nrendering producers all the more vulnerable. A class analysis of \nhousehold-level farm production data from two states reveals the pattern \nof income decline and rising indebtedness in rural areas. The deleterious \nimplications that these processes have for future agrarian development \ncall for effective price stabilization operations and, in the short run, a \ncomprehensive debt-relief policy. \nKey words: Agricultural Policy, Farm Households, House Hold Farm \nProduction, Price Policy \nJEL Classification: Q18, Q12, D13, E 64