The Promise of Doubling Farmers Income

India’s agriculture sector is riddled with multiple purposes i.e., ensuring food security in the country, ensuring affordable prices for food commodities and lastly promoting farmers welfare. While India has come a long way, there has hardly been any recognition of ensuring farmers welfare in economic terms. Hence, minimal growth is witnessed in farmers’ income leading to agrarian distress and prevalence of poverty in rural agricultural households. When the Prime Minister announced on 28th February, 2016, his vision of doubling farmers income by India’s 75th years of independence, it was viewed with both scepticism and hope. Let us take a look at the evolution of the mission of doubling the farmers income, rationale behind the target and the present status of the mission. 

There is various evidence showing the slow growth of income in farmers warranting a focused approach from the government towards income enhancement of farmers. Chand (2015) analysed trends of farm income over the decades comparing the income of non-agriculture sector and observed a stark difference in growth of income of workers in agriculture and non-agriculture sector. A farmer in an agricultural household earned 1/3rd of the income of a non-agriculture worker. In another paper, Chand (2016) attributes the agrarian distress in the country to the widening gap between growth rate and income generated per worker between agricultural and non-agricultural sectors.

Income of farmers or agricultural households are directly dependent on the prices received by farmers for their crops. The lack of remunerative prices received by the farmers or lack of access to larger markets or other reasons account for the slow economic growth of farmers or agriculture sector at large. The farmers are unable to participate in the supply chain from farm-gate to consumer due to multiple reasons such as restriction on sale, stocking and movement beyond their local mandis resulting in lower share of farmers in retail prices varying between 28-78 percent across 14 crops (RBI Bulletin 2019) . Agriculture sector has seen improvement in production terms but the net returns or remunerative prices to the farmers is still a challenge for most farmers.

Actions Taken by Government

An inter-ministerial Doubling Farmers’ Income committee was appointed in 2016 to take a holistic, contextual and outcome-based approach to provide a roadmap to achieve the enormous task. The Committee approached agriculture not merely from a production-centric perspective, but as an enterprise with an income-centric viewpoint to formulate the strategies and major reforms required for fulfilling the mission of doubling farmers ‘ income. Some of the recommendations of the committee is as follows:

  • The income growth rate needs to be 10.4 percent per annum for the next seven years until 2022-23. 
  • All concerned departments at central and state levels must disaggregate the interventions to achieve higher share of farm income in the farmers’ cumulative income for greater viability to farming. Hence, the target to change the ratio of farm to non-farm income from the existing 60:40 (in 2015-16) to 70:30 (by 2022-23).
  • Prioritization of FPOs for cultivation on pooled land and for allied infrastructure development to achieve the desired economy of scale in operation. Committee places a lot of expectation on the ability of FPOs to address the structural weakness of small and marginal farmers.

The DFI Committee also recommended major market reforms and increased focus on sub-sectors of agriculture like animal husbandry, poultry and fisheries. During the recent decade (2004-05 to 2014-15), crop, livestock and fisheries registered growth of 2.93, 6.11 and 5.13 per cent per annum, respectively. Thus, the livestock sector has proved as the best possible alternative for addressing agrarian distress as it guarantees a sustained source of income and also generates income more frequently than the crop sector (Saxena et al, 2017). Primarily, the committee said that agriculture in India must be viewed as an enterprise that should be based on the principles of profit. R Chand (2014) opined that the most important factor for improved performance of agriculture, post 2004-05 period, has been the price received by the farmers through hike in MSP, increase in food grain procurement, increase in global agricultural prices and strong domestic demand for food.

Present Status

The average income of farmers has witnessed an increase from Rs 25,380 in 2002-03 to Rs 77,112 in 2012-13 and further to Rs 1,22,616 in 2018-19. NSSO 77th round (2019) presents the latest income statistics of farmers. The monthly income data per agricultural household according to NSSO 77th round depicts a direct relation between the size of land possessed and the total income. Average monthly income per agricultural household during agricultural year 2018-19 is Rs. 10,218, a nominal increase of 59% i.e., Rs 6,424 from the last SAS survey conducted in 2013.  The composition of income of small and marginal farmers shows a larger level of dependence on wages than crop production. Medium and large farmers however earn around 70% of their income from crop production. While a research study by SBI shows that average income of farmers increased by 1.3 to 1.7 times across India between 2017-18 to and 2021-22.

In 2019, the central government appointed the Ashok Dalwai’ Doubling Farmers’ Income Committee (2016) to act as an empowered body to oversee the implementation of its recommendations so that the promise of doubling farmers income can be achieved by 2022. The union agriculture minister in response to a question whether the target fixed for the year 2022-23 can be achieved at the present annual growth said, “…that the implementation of various recommendations of the committee and comprehensive interventions of the government are “having a positive impact on growth of agriculture and income of farmers”.

In the Budget session of Parliament (2022), various questions were asked to the agriculture ministry about the government’s plan for doubling farmers income, steps taken to achieve the targets and progress on the mission. The Ministry replied that various schemes and programmes of the Government are aimed at the welfare of farmers by increasing production, remunerative returns and income support to farmers. All the responses from the government have been ambiguous about the progress on doubling farmers income or whether the government is confident that it will reach the target within the stipulated time frame.  Agriculture sector has shown positive growth rate and record outputs during the pandemic increasing the share of agriculture in the country’s GDP. Although there is limited knowledge about whether it has affected farmers’ economic growth. The monthly income and land distribution data by the NSSO 77th survey shows improvement over the NSSO 70th round (2013) round but it hardly presents a bright scenario for farmers. The declining share of farm income is a concerning trend which requires several regulatory and market related interventions.

The timeframe of the mammoth task of doubling farmers’ income envisioned by the government is yet to reach its conclusion.  However, there are numerous actions taken in the past showing promising results, adoption and integration of modern technology to revolutionise the marketing system and continuous government support in terms of cash transfers and subsidies aiding farmers. Policies and schemes are only a starting point for achieving the desired outcome, it must contain process evaluation and review which helps the institutions to monitor the progress of the scheme and therefore do course correction, if required. While the target was announced in 2016, there is a lot of ambiguity over the plan, such as the roadmap, data about baseline income, clarity over these specifics would help both government and researchers to assess or evaluate the mission.

References

  1. Chand, Ramesh (2014): “Agricultural Growth, Farmers’ Income and Nutrition Security in India: Linkages and Challenges”, 12th L S Venkataramanan Memorial Lecture, Institute for Social and Economic Change, Bengaluru
  2. Chand R., Saxena R., Rana S. (2015) Estimates and Analysis of Farm Income in India, 1983-84 to 2011-12. Economic and Political Weekly. Vol l No 22.
  3. Raka Saxena, Naveen P. Singh, Balaji S.J., Usha Ahuja, Rohit Kumar and Deepika Joshi (2017). Doubling Farmers’ Income in India by 2022-23: Sources of Growth and Approaches. Agricultural Economics Research Review 2017
  4. RBI Bulletin 2019. Supply Chain Dynamics and Food Inflation in India. URL: https://rbidocs.rbi.org.in/rdocs/Bulletin/PDFs/1SUPPLYCHAINDYNAMICSE29D2F2AC0BF4F1DB05731C6E9B64885.PDF
Disclaimer

The views expressed in this article are the author's own.

Leave a Comment

Your email address will not be published. Required fields are marked *

Share via
Copy link
Powered by Social Snap