Editorial. Editorial. Policies to double farm income can be improved upon

Prime Minister Narendra Modi had said in February 2016 that the income of farmers would be doubled by 2022. As we come to the close of the period, it is time to do some stock-taking. As NITI Aayog member Ramesh Chand explained in a March 2017 paper on the subject, this promise meant that the real income of farmers would be doubled between 2015-16 and 2022-23.

At the recently held businessline agri-summit, CEO of the National Rainfed Area Authority, Ashok Dalwai, shed some light on the key metrics. Dalwai, who was also heading the panel on doubling farm incomes (which submitted its report in September 2018), said that the average monthly income of farmers, derived from NSO Surveys, worked out to ₹8,059 at 2015-16 prices. According to him, a doubling of income in real terms at the end of 2022-23 would work out to ₹14,339, “the actual target”. He indicated that farmers’ monthly income would be ‘near-double’ by the end of this fiscal.

The discussion at the summit on the subject centred around shifting acreage under cereals to horticulture, edible oils and pulses. A growth in output, as Chand points out in his 2017 paper, does not necessarily lead to a rise in incomes. Farm incomes, he observes, are also dependent on whether the terms of trade are in favour of agriculture. Therefore, while the output of pulses has increased from 16 million tonnes in 2015-16 to 26 million tonnes in 2021-22, thanks to sharp MSP increases to promote cultivation, whether that has led to higher incomes of pulses growers cannot be readily concluded. The same principle holds with respect to horticulture output. The latest Situational Assessment Survey (77th Round of NSSO) released in September 2021 (pertaining to 2019), shows that compared to SAS 2014, income from cultivation had dropped from 48 per cent to 37 per cent of the income of an agricultural household, while that from livestock had increased from 12 per cent to 16 per cent. Wages income accounted for 40 per cent, against 37 per cent earlier, a troubling sign. It appears that livestock, and dairy have been a success in terms of creating an income stream, but the impact of the other thrust areas is not clear.

Yet, the farm sector has been a bright spot in the economy. The average rate of growth of agriculture and allied sectors since 2016-17 has been over 4 per cent. The Centre has enhanced allocations for agriculture by more than five times since 2015-16, while the emergence of Farmers’ Producer Companies (about 17,000 of them today according to the Tata-Cornell Institute) is turning out to be a game-changer in terms of agri-marketing. As aggregators of small farmers’ produce, FPOs can play a big role in exploring new markets, both domestic and global. State price intervention has its limits. Improved storage, productivity and efficient markets, including futures, can transform the fortunes of India’s farmers.

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