Doubling the Farmers’ Income – a myth or reality

Context: As we are in 2023, we are reminded of the government’s failed ambition of doubling the farmers’ income by 2022. Although recently, an expert committee headed by Ashok Dalwai submitted a report on Doubling Farmers’ Income (DFI) in 14 volumes.

India’s Agri Sector At a Glance:

• Contribution of India’ Agriculture and allied sector in Gross Domestic Product stood at about 55% in 1951.
• According to the Economic Survey, the share of Agriculture and allied sectors in total Gross Value Added (GVA) in 2020-21 stood at about 20%.

• Share of Agriculture and Allied Activities in Agriculture GVA
  • Crops – 60%
  • Livestock – 27%
  • Forestry & Logging – 7%
  • Fishing & Aquaculture – 6%
• Agriculture sector was the only sector to have clocked a positive growth of 3.4% in 2020-21 (during COVID lockdown).
• According to the World Bank, about 42 % of India’s workforce was employed in the Agriculture sector in 2018-19.
• More than two-third of the total workforce was employed in the agriculture sector in 1951.
• About 16 crore Indian workers are engaged in agriculture and allied sectors in 2018-19.
• In 1951 more than two-third of the unorganized workforce was involved in Agriculture and allied sectors.

Significance of doubling farmers’ income:

• Fluctuations in farmers’ income: The low and highly fluctuating farm income is causing a detrimental effect on the interest in farming and farm investments.
  • It is also forcing more and more cultivators, particularly younger age groups, to leave farming.
• Agrarian distress: There has been a large disparity between the income of a farmer and non-agricultural worker since long and this coupled with low level of absolute income has led to emergence of agrarian distress in the country, particularly in late 1990s.
  • In recent times it has gotten severe and been impacting almost half of the population of the country that is dependent on farming for livelihood.
• Poverty and farmer suicides: Poverty coupled with natural disasters and other such reasons caused country a sharp increase in the number of farmer suicides in late 1990s to 2000s.
• Promotes farmers welfare: Farmers’ increased income may address agrarian distress and promote farmers welfare.
  • Thus the goal of doubling farmers’ income by 2022-23 is central to bring parity between the income of farmers and those working in non-agricultural professions.
• Faulty policy decisions: Past strategy for the development of the agriculture sector in India has focused primarily on raising agricultural output and improving food security.
  • This has been a reason for farmers’ low income and which is evident from the incidence of poverty among farm households.

Ashok Dalwai panel farm income estimations:

• Methodology: The Dalwai panel adopted a broader definition of ‘farmer’ used by the Situation Assessment Survey (SAS) of the National Statistical Office (NSO).
  • It used all the income of such households for defining the target of doubling farmers’ incomes.
  • This included non-farm incomes from businesses and the labour wages of farmer households.
• Issues with the methodology: Lack of latest data as the most recent NSO survey of farmers is for 2018-19 and prior to that was in 2012-13.
  • There is no way to estimate farmers’ incomes in 2022, as there have been no surveys after 2018-19 and it is unlikely in near future as these are generally decennial.
  • Even the older data also shows that the income of farmer households from crop cultivation declined 1.5% per annum between 2012-13 and 2018-19.
  • Possibility of data manipulation as the income of farmers does rise barely by 0.6% per annum, when livestock income is included.
  • On adding non-farm income, it shows a growth of 2.8% per annum and based on the non-farm intake of farmer households.
• Differential definitions and criterion if another source of data on income of agricultural households are used such as the survey of rural households as part of the NABARD All India Financial Inclusion Survey (NAFIS).
• Also its definition of agricultural households and income differs from the SAS’s and only provides data on income for 2015-16.

However, it found that the income of agricultural households from all sources increased 1.7% per annum between 2015-16 and 2018-19, less than half the 3.8% growth rate of the prior period between 2012-13 and 2015-16.

Government of India initiatives to improve farmer’s income:

• Wide range of Agri- schemes such as crop insurance under Pradhan Mantri Fasal Bima Yojna (PMFBY), supplementary income support under PM-KISAN, new procurement policy under PM-AASHA in addition to FCI operations, better access to irrigation under Pradhan Mantri Krishi Sinchayi Yojana (PMKSY) etc.
• Smart Agriculture through adoption of drone technologies in agriculture which has a potential to revolutionize Indian agriculture.
• Increase in Minimum Support Price (MSPs) for all Kharif and Rabi crops ensuring a minimum of 50 percent of profit margin on the cost of production
• Formation and promotion of 10,000 Farmer Producer Organisations (FPOs) along with necessary financial support under Aatmanirbhar Package (Agriculture).
• National Mission for Sustainable Agriculture (NMSA), which aims to evolve and implement strategies to make Indian agriculture more resilient to the changing climate.
• Range of schemes and programmes for Agri allied services such Bee-Keeping Mission, Rashtriya Gokul Mission, Blue Revolution, Interest Subvention Scheme, agroforestry, restructured bamboo mission etc.

Way Forward:

From the above information, given our lack of data there is little possibility of concrete and robust estimates of farmers’ income in the last 5 years. Although based on the available sources we can infer that, there has been a deceleration in farmer incomes after 2015-16, irrespective of the source or method.

Not only the farmers’ income but rural real wages are also declining in the last five years, even wage workers have not seen any growth in their incomes. Three-fourths of rural workers are witnessing a decline in income, likely to deepen the rural stress. While this has an impact on lives and livelihood, given spiralling inflation in recent times and a demand deficiency will deepen the crisis in our economy.

The problem with respect to Agriculture in India is deep-rooted. It requires systemic solutions with a well-thought-out strategy and policy reforms. Therefore, for any meaningful plan aimed at an economic revival in the future, prioritizing the revival of India’s rural economy is not just desirable, but a necessity.

Source:  Indian Express