Beyond Loan Waivers: Empirical Evidence from Punjab, Maharashtra, and Uttar Pradesh on Farmer Distress and Coping Mechanisms

This study investigates the multidimensional nature of farmer distress and the effectiveness of coping mechanisms across Punjab, Maharashtra and Uttar Pradesh, using primary survey data from 2,838 farmers. The dataset is from an earlier study titled Farm Loan Waivers in India: Assessing Impact and Looking Ahead , published and supported by NABARD. Employing multiple correspondence analyses, a Farmer Distress Index (FDI) and Coping Mechanism Index are constructed to quantify key stressors and assess response strategies. Results reveal that income fluctuations, crop and livestock losses and rising capital costs are among the most significant drivers of distress for farmers, with small and marginal farmers disproportionately affected. While coping mechanisms, ranging from income diversification to improved access to institutional credit, are widely used, their effectiveness in mitigating distress is uneven. Farm loan waivers were associated with higher levels of distress, indicating perhaps limited long-term impact, whereas crop insurance was linked to lower distress, though it remains underutilized. Regression and structural equation modelling analyses further underscore the structural and systemic nature of agrarian distress, showing that while distress increases coping behaviour, coping mechanisms do not significantly reduce distress. This underscores the reactive and temporary nature of most responses. The study concludes that addressing farmer distress requires a shift from reactive, short-term relief measures to comprehensive, structural interventions that enhance resilience, financial inclusion and institutional effectiveness. It also proposes a real-time FDI to track distress levels and enable targeted interventions. JEL Classification: Q12, Q14, Q18, C38, C51, O13