Agri Business

Real or nominal? Which farm income will Modi double in 5 years?

Rajalakshmi Nirmal BL Research Bureau | Updated on January 12, 2018 Published on February 08, 2017

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Nominal income already doubles every 6 years; real income will take 16 years



Nearly a year ago, Prime Minister Narendra Modi unveiled his dream of doubling farmers’ incomes by 2022. But how viable is this promise?

For one, there is ambiguity on the number the Centre is targeting. Data on farm income is not released at regular intervals. A survey of the National Sample Survey Organisation comes once in 10 years or so. The last such survey on farm income was in 2012-13.

Further, data from NSSO surveys reveal that under normal circumstances, the nominal income of farmers doubles in six years. In 2002-03, the average monthly income of farmers stood at ₹2,115. This grew to ₹6,426 by 2012-13, an annual increase of 11.75 per cent.

In other words, regardless of massive government efforts, the farmer’s nominal income has been growing at the rate promised by the PM.

Monumental challenge

So, is the Centre targeting real income? A BusinessLine analysis of the RBI’s data on the consumer price index (CPI) of agricultural labourers, for the 10-year period between 2002-03 and 2012-13, revealed that inflation measured 7.2 per cent on an average. This means that agricultural income, in real terms, can grow only around 4-4.5 per cent a year. With an annual growth of 4.5 per cent at best, a farmer’s income can double only in 16 years!

“It has not been clarified if they are looking at real or nominal income of farmers, but, I assume they are talking about real income, as otherwise there is no point in it as nominal incomes will anyway double in five or six years…” said Siraj Husain, former Agriculture Secretary. Vijay Sardana, a member of SEBI’s commodity panel (Commodity Derivatives Advisory Committee) questions why the Centre did not lay out a roadmap to achieve the objective. “It means a 20 per cent increase every year in a farmer’s income, which is very significant. But how are they going to do it?”

Interestingly, Sardana also indicated that in 2015, the Agriculture Ministry told the Supreme Court that the MSP of cereals, pulses or any other crop cannot be on the basis of input cost plus 50 per cent as demanded by the Consortium of Indian Farmers’ Associations.

In the round table conducted by the Indian Council of Food and Agriculture last year, the expert recommendations for increasing farmer income revolved around five themes: improving farm productivity, provision of better water and management of other inputs, an integrated farming system, better price realisation and some special measures including promotion of scientific agriculture.

To execute the above is a challenge. Fund allocations aside, co-operation from States is necessary, say experts. The Centre, has allocated more funds to irrigation and promised money for dairy processing and infrastructure development in Budget 2017. It has also provided funds for grading facilities at eNAM markets. But, doubts remain if all this will really double farmer income in five years.

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Published on February 08, 2017
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