Budget 2020

Now, it may take more time to double farmers’ income

Rajalakshmi Nirmal | Updated on February 04, 2019 Published on February 01, 2019

Three years ago, while addressing a farmers’ rally in Bareilly, Uttar Pradesh, Prime Minister Narendra Modi promised to double income of farmers by 2022. Critics were sceptical, given that it would have required a growth of over 10 per cent a year. But ever since the idea of an income support scheme began doing the rounds in the North Block, many believed the Centre may use it as a tool to achieve its target.

In fact, it would have been an easy task to double farmers’ income by the target year had stand-in Finance Minister Piyush Goyal announced a scheme on the lines of Telangana’s Rythu Bandhu scheme, in his Interim Budget speech.

Under Rythu Bandhu, all farmers in the State are paid ₹8,000/acre per year, which translates to ₹20,000/hectare a year. This means a total outlay of ₹2.8 lakh-crore.

In 2015-16, an Indian farmer earned ₹44,027 at real prices. This sum had to grow to ₹88,000 by 2022-23 for the Prime Minister’s dream to turn in to reality.

Now, left to itself, income would have grown to ₹54,628 by 2022-23. This is assuming growth at the long-term average rate of 3.13 per cent achieved between 1993-94 and 2015-16. But if the benefit from an income support scheme akin to Rythu Bandhu is added, the gap to the target income narrows significantly.

For example, given that the average size of holding of a farmer in India is 1.08 hectares, the cash benefit per farmer would have been ₹21,600 (₹20,000 x 1.08). From 2019-20, a farmer would have had a yearly additional income of ₹21,600. In 2022-23, when actual income will be ₹54,628, a farmer’s total income would have been ₹76,228 — 73 per cent more than in 2015-16.

If farmers’ income grows at 3-plus per cent or if the Centre increases the cash transfer in any year, the target of ₹88,000 would have been achieved easily.

But the Pradhan Mantri Kisan Samman Nidhi, with just ₹6,000 a year for a farmer (at a total cost of ₹75,000 crore), will do very little in taking farmers’ income close to the target by 2022-23.

Unless returns of farmers go up substantially and their income is boosted by non-farm sources, the dream of doubling farm income by 2022 will remain just that, a dream.

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Published on February 01, 2019
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