Economic Survey 2022 | No space for farmer protests, farm sector reforms

Discontent on the fields, which led to one of the longest protests since India’s Independence, does not find mention in the Economic Survey.
The farmers withdrew their year-old protest only recently and only after the government agreed to repeal the farm bills which had proposed several reforms for the agricultural sector.

The Survey also steers clear of any sweeping reforms in the farm sector and makes no mention of the government’s promise to double farmers’ income by 2022. Instead, it speaks at length about the role of the minimum support price (MSP) in providing farmers with better remuneration over their cost of production and offering them encouragement for crop rotation.
The survey exhorts farmers to focus more on allied activities like animal husbandry, dairying and fishing than on crop cultivation to boost income. While this is good advice, it is neither new nor path-breaking.
A committee constituted by the government earlier to recommend ways of doubling farmers’ income by 2022 had also made recommendations along the same lines.

Growth
The agriculture sector is the largest employer of workforce and it accounted for 18.8 percent (2021-22) in Gross Value Added (GVA) of the country, growing 3.6 percent in 2020-21 and 3.9 percent in 2021-22.
Growth in allied sectors, including livestock, dairying and fisheries, has been the major drivers of overall growth. In FY22, food grain production for the Kharif season is estimated at a record 150.5 million tonnes. Procurement of food grains under the central pool, accordingly, maintained its rising trend in 2021-22, along with MSP.

The survey says that the strong performance of the agriculture sector was supported by the government’s policies that “ensured timely supplies of seeds and fertilisers, despite pandemic-related disruptions. It was also helped by good monsoon rains as reflected in reservoir levels being higher than the 10-year average”.

Cash for Kisan
During the year, the government made several payments to farmers under different schemes. Under the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN), which entitles identified beneficiaries for Rs 6,000 each year in three instalments, 10 crore farmer households have been given Rs 1.18 lakh crore in six instalments since February 2019.
Also, additional emergency working capital worth Rs 30,000 crore was arranged for farmers through NABARD. Over 1.5 crore Kisan Credit Cards were also issued, with a credit limit of Rs 1.35 lakh crore.

MSP play
The government fixes the MSP of 22 mandated agricultural crops. In 2019, it had promised that MSP would be calculated on the principle of one-and-a-half times the cost of production. The survey says this principle has been followed since and the MSP for all mandated Kharif, Rabi and other commercial crops has been raised.
So the highest absolute increase in MSP over the previous year has been recommended for sesamum (Rs 452 per quintal), followed by tur and urad (Rs 300 per quintal each).

In case of groundnut and niger seed, there has been an increase of Rs 275 per quintal and Rs 235 per quintal, respectively, from the previous year. The expected returns to farmers over cost of production are estimated to be the highest in the case of bajra (85 percent). For urad and tur, the return to farmers is estimated at 65 percent and 62 percent, respectively. For the rest of the crops, return to farmers is estimated to be at least 50 percent.

Fragmentation
The survey has quoted the Situation Assessment Survey of 2019 to point out the increasing fragmentation of land holdings of farmers.
The average size of household ownership holdings has declined from 0.725 hectare in 2003 to 0.592 hectare in 2013, and, further, to 0.512 hectare in 2019. The increasing number of small farmers and increasing importance of livestock sector requires increased focus on measures like development of small farm technology, boosting non-farm businesses and development of allied activities, including animal husbandry, dairying and fisheries.
On the farmers’ income front, it is clear that the share of income from crop cultivation has shrunk from 48 percent six years back to just 37 percent in 2019.

Small and marginal farmers are unable to earn enough from core farming activity and instead earn the lion’s share of the total income (40 percent) from wages. This is where the survey has spoken about the importance of allied activities and the criticality of crop rotation to reduce farmers’ dependence on crops alone for livelihood.

policyIt has also alluded to the importance of farm mechanisation in reducing the cost of cultivation and in increasing productivity through the efficient use of natural resources and other inputs. The penetration of powered machines in various farm activities is still just 40-45 percent, as per NABARD.