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Doubling farmers' income by 2022 a goal within reach?

There is no data after AY2018-19 on average income of farming households and the pandemic has probably worsened last-mile delivery of several schemes the Centre has over the years said it would augment income of farmers

January 28, 2022 / 02:50 PM IST

The average income of agricultural households in India was just Rs 10,218 per month in agricultural year (July-June) 2018-19. While this is an almost 60 percent increase over 2012-13, the fine print of the government’s findings (contained in the latest Situation Assessment Survey or SAS) indicates mounting income stress for India’s farmers during these six years. For one, farmers are now earning more from wages than from crop cultivation, indicating that cultivation is becoming less lucrative. Then, nearly every second farming household remained indebted in 2018-19 (much like 2012-13) but the indebtedness or amount owed has increased significantly. Also, an overwhelming majority of farmers continue to hold minuscule land areas, with only 0.2 percent of rural households owning more than 10 hectares in AY2018-19.

So, is Prime Minister Narendra Modi’s call in 2016 to double farmers’ income by 2022 still a work in progress? There is no data after AY2018-19 on average income of farming households and the pandemic has probably worsened last-mile delivery of several schemes the Centre has over the years said it would augment income of farmers. In the Union budget for 2021-22, finance minister Nirmala Sitharaman had announced several initiatives:

1)    She had said that the minimum support price or MSP regime has already undergone a “sea change” to assure a price that is at least 1.5 times the cost of production across all commodities, even as procurement also continued to increase at a steady pace. This has resulted in an increase in payment to farmers substantially.

2)    The agricultural credit target had been increased to Rs 16.5 lakh crore for FY22 and the FM had assured increased credit flow to animal husbandry, dairy and fisheries.

3)    The allocation to the Rural Infrastructure Development Fund was increased from Rs 30,000 crore to Rs 40,000 crore.

4)    Corpus of the Micro Irrigation Fund had been doubled to Rs 10,000 crore.

In 2016, the government had constituted an inter-ministerial committee to examine issues relating to “Doubling of Farmers Income”. In 2019, an empowered body was set up to monitor and review the progress of the recommendations of this committee. The committee has identified seven sources of income growth——improvement in crop productivity; improvement in livestock productivity; resource use efficiency or savings in the cost of production; increase in the cropping intensity; diversification towards high-value crops; improvement in real prices received by farmers; and shift from farm to non-farm occupations.

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Even if it may not have doubled, has farmers’ income actually increased since 2016? Dhiresh, co-Founder and CEO of agri-tech startup Neem Tree Agro Solutions, says that in 2016 the Ashok Dalwai committee said that the doubling of farmers’ income target was in real terms and to achieve that goal by 2022, the compound annual growth rate (CAGR) should be 10.4 percent. “According to the latest agriculture census by the National Sample Survey Office, the average CAGR of farmers having a landholding size of 0.01-1 hectare was 9.6 percent. And this growth rate is very close to the required growth rate of 10.4 percent.”

At the state level, very high growth rates were observed in Uttarakhand (17.1%), followed by Meghalaya (14.2%) and Bihar (11.2%), which clearly show that the targets are being achieved by certain states and the marginal farmers with landholding size of up to 1 hectare are benefiting the most.  However, for India as a whole, it is still a long road ahead and there is a certain niche that certainly needs more attention, Dhiresh says.

As per the SAS for AY2018-19, farmers are earning more from wages than from cultivation. In 2012-13 an agricultural household earned 48 percent of the income from crop cultivation, which declined to 38 percent under the 2018-19 survey. During the same period, the share of farm income from wages alone rose from 32 percent to 40 percent. The lesser the farm income, the more is the effort to draw credit, sometimes from multiple sources. The average farm debt increased to Rs 74,100 in 2018-19 from Rs 47,000 in 2012-13. About half of agricultural households carried outstanding loans. Only about 77 percent of agricultural households are self-employed so it is worrying that 70.8 percent of the landholdings are less than 1 hectare. Only 0.2% of the rural households have more than 10 hectares of land.

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Agri expert Devinder Sharma points out that while no one had any clear idea about the average income of Indian farmers in 2016, when the target of doubling it by 2022 was announced, the Economic Survey that year had said that the average annual income of farmers in 17 states (or roughly half the country) was Rs 20,000. “This means it was less than Rs 1,700 a month. This is not enough to even rear a cow, how will farming families survive?” And the SAS of 2018-19 shows income from agricultural plus non-agricultural activities is about Rs 10,218 per month. “So this includes income from non-agri activities and is still less than what a chaprasi (peon) earns. Income from farming alone is Rs 27 per day—less than even minimum wage,” Sharma says.

Trade policy analyst S Chandrasekaran says farmers’ income has increased since 2016 “but maybe not as much as expected”.  In the last two years of lockdowns and restrictions due to COVID-19, some areas such as agri exports are showing promise. “Take maize. India has become a major maize exporter, ahead of the US, due to reduction in logistics costs. In wheat too, we have emerged as an important global player. Earlier, we were accounting for 50-60 percent of global pulses imports but this has been reduced to about a fourth. This has been possible by bringing market prices closer to MSP,” says Chandrasekaran.

MSP is a key focus of the entire debate over farmers’ income. The government has already withdrawn the farm bills that had led to strident farmers’ protests last year. Sharma says that giving legal sanctity to MSP—the new demand of farmers—is one of the best ways of raising farmers’ income. “At present, MSP is announced for 23 crops but effective implementation is for wheat and rice and, to some extent, for cotton and pulses. Legal sanctity will mean farmers will not get less than MSP. Now, they get 30-40 percent lower than MSP in markets except for Punjab and Haryana. As an example, let us take 2020, when 50 lakh tonnes of paddy came from Bihar and eastern Uttar Pradesh to Punjab because farmers were getting just Rs 1,100-1,200 per quintal in Bihar against Rs 1,800-1,900 MSP. In e-NAMs too, unless MSP or guaranteed price is offered, it wouldn’t help farmers,” says Sharma.

Agri scientist B K Singh has also said that the target of doubling farmers’ income is far from being achieved despite “sincere efforts by the government. The Dalwai committee suggested ways of augmenting farmers’ income through related, non-agri activities like dairy, fishing etc.”

As for the budgetary allocation for the ministry of agriculture and farmers’ welfare, nearly 50 paise of every rupee is spent on the PM-KISAN scheme. Announced in the lead-up to the 2019 national elections, PM-KISAN assures a cash transfer of Rs 6,000 annually to about 120 million small and marginal farmers. An analysis by PRS Legislative shows that in 2021-22, allocation to this scheme was reduced due to anomalies in the number of beneficiaries.
Sindhu Bhattacharya is a journalist based in Delhi who writes on a range of topics in business and economy.
first published: Jan 28, 2022 02:49 pm