Wealth and Suicide

The price of gold is always a matter of interest in India as it annually consumes about 20% of the world’s gold production - 963 metric tonnes in 2010. In the face of negligible domestic production (Indian mines produced less than 3 metric tonnes of gold in 2010), the reasons behind Indians preference for gold lie deep in the country’s culture. Unlike the U.S., India’s culture is ancient and still predominantly rural; and within that culture gold is not just a luxury. It has long been a hedge against capricious government and crop failures; and in modern India it has become, albeit not a secure one, a hedge against inflation. In its capacity as a piece of ‘security’ it is given to brides and babies, while as a symbol of status a grain of gold is placed in the mouth of a deceased loved one. All of which brings me to the role of wealth in Indian society and the affects of a disparate distribution of wealth on the country’s rural poor. While Europe and the United States went from boom to bust over the last sixteen years, in that same interval more than a quarter of a million Indian farmers have committed suicide, often with our world’s economy as a contributory factor.  As India’s urban population has increasingly benefited from industrial growth, its wealth has grown. Increased wealth has made increased spending possible for them; so the law of supply and demand has kicked in. That is, as the supply of money (to urban Indians) has become greater, they have been able to buy more goods and services; and they have demanded them. As demand has grown, prices asked for them have grown as well in the inflation typical of growing economies. This has affected the 72% of India’s population that remains rural in a number of ways.

Both their costs of living and their aspirations for the good things in life have grown. They have become less content with a life built around subsistence farming; that is, farming principally to feed themselves - selling whatever surplus there might be for a little cash or gold. Discontent has led India’s agriculture to drift into two directions, both aimed at producing ‘cash crops‘ that would give rural Indians the wherewithal to buy what they desire.  In India’s traditional ‘grain belt’ farmers have used newly developed grains (products of the ‘green revolution‘ of the 1970s) to increase their production of some, but not all, crops. They have concentrated on cereal grains and ignored much of what had been traditionally raised to feed the family. This has left them less self sufficient than they had been in the past and newly dependent on the cash earned by their crops. In parts of India less suitable to food crops, cotton culture has reigned supreme; but of course, farming this cash crop has created an even greater exposure to the risks created bycrop failures - as well as a new risk. Both grain and cotton farmers are now more exposed to the vagaries of market prices for their products than ever before.

As savers, Indian farmers have historically guarded themselves against crop failures by hoarding gold, very often in the form of gold jewelry. In traditional India when the failure of the monsoon, on which much of India’s agriculture depends, caused crops to fail, the gold was sold. If there was enough of it to pay the cost of feeding the family until the next harvest, the family survived. The rise of cash crop farming, however, has made even a fairly modest failure of monsoon rains a potential catastrophe. In drought conditions many Indian farmers have borrowed money, using their land as security, to sink irrigation wells. Without effective laws against usury, however, usurious interest on such loans have been the rule, not the exception; and this has often led to personal disaster.  Recently, for example, there has been a case in the Indian appeals courts involving a $280 loan that ballooned, through the application of huge interest, to almost $1900. Unable to make his payments, the farmer has lost his land; so indebtedness has become impoverishment  

Then there is the market. Between failures of the monsoon and the collapse of the world market price for cotton, the current situation of India’s cotton farmers is dire. While India’s per capita GDP is a bit more than $3000 per annum, the current value of the average Indian farmer’s cotton crop is most often less than one tenth of that. This has driven many into insuperable debt; and such debt and a consequent inability to feed their families has so shamed many that they have taken their own lives. In this way India’s better than 8% annual economic growth rate has led many of India’s rural poor to suicide.

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