Paper long abstract:

Despite liberalisation and commercialisation policies since the 1990s, the agricultural sector in India contributed to only 9% of total poverty reduction between 1991-2012 (Datt et al, 2020), but makes up 43% of India's workforce. Contesting structural transformation theory linking agricultural commercialisation with productivity led transitions to skilled non-farm jobs (De Janvry, 2010), in this paper I argue that crop failures and rising debt repayment pressures from agricultural commercialisation under climate change caused a distress induced deagrarianisation to make ends meet. In this paper, I conducted 94 interviews and 151 household surveys in rural Telangana, a semi-arid agrarian state in south India. I found that despite the ubiquitous adoption of genetically modified Bt cotton and groundwater irrigation since 2000, up to 70% of household incomes were from non-farm sources. Bt cotton and groundwater failures accounted for 47% of household debts. Furthermore, I show that both farm and non-farm incomes were still insufficient to repay debts or household expenses, as households faced average net losses of ~$1500 in 2018. This is a function of "jobless" economic growth in India for the last decade, as non-farm labour markets have only provided low skilled and menial opportunities (Mehra, 2019). To cope with economic penury, households engaged in what I call "risk indebtedness treadmills", selling land, doubling down on Bt cotton, and stacking credit to earn short term cash for debt repayment. Yet, long term, this only eroded assets and increased indebtedness, prolonging the livelihoods crisis.