Doubling Farmers’ Income: Initiatives, Status, Challenges – Explained, pointwise

Introduction

In 2016, the Government had set the target of doubling farmers’ income by 2022-23. To achieve this goal, the government had set up a committee to recommend changes to all parts of the agricultural production and supply chain. The Committee listed its recommendations in a 14-volume report. At the time, by the government’s own calculations, a farming household in India earned an average of INR 8,059 per month, or about INR 97,000 per year. The Government is likely to miss the target as less than a year remains in the timeline. No individual state is likely to achieve it either.

Source: Live Mint

What were the recommendations of the Dalwai Committee?

The Government had constituted an Inter-ministerial Committee in April, 2016 to examine issues relating to ‘Doubling Farmers’ Income’ (DFI) under the leadership of Ashok Dalwai. The Committee had submitted its Report to the Government in September, 2018 containing the strategy for doubling farmers’ income by the year 2022. The DFI strategy as recommended by the Committee include seven sources of income growth – (a) Improvement in crop productivity; (b) Improvement in livestock productivity; (c) Resource use efficiency or savings in the cost of production; (d) Increase in the cropping intensity; (e) Diversification towards high value crops; (f) Improvement in real prices received by farmers; (g) Shift from farm to non-farm occupations.

The latest round of the Situation Assessment Survey carried out by the National Statistical Organisation (NSO) had pegged the average monthly income of farmers at Rs 10,281. Even with inflation-adjusted, this turns out to be roughly about 20% more.

What steps have been taken for doubling farmers’ income?

Pradhan Mantri Kisan Samman Nidhi (PM-KISAN): The scheme provides a payment of Rs. 6000/- per year, in three 4-monthly installments of Rs. 2000/- to the farmers’ families.

Pradhan Mantri Kisan Man Dhan Yojana (PM-KMY): Under this Scheme, a minimum fixed pension of Rs. 3000/- will be provided to the eligible small and marginal farmers, subject to certain exclusion clauses, on attaining the age of 60 years.

Pradhan Mantri Fasal Bima Yojana (PMFBY): It was launched from the Kharif 2016 season. This scheme provides insurance cover for all stages of the crop cycle including post-harvest risks in specified instances, with low premium contribution by farmers.

MSP increase: The Government has approved the increase in the Minimum Support Price (MSPs) for all Kharif & Rabi crops for 2018-19 season at a level of at least 150 percent of the cost of production.

Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA): The Scheme is aimed at ensuring remunerative prices to the farmers for their produce as announced in the Union Budget for 2018.

Atma Nirbhar Bharat Package for Agriculture: It includes comprehensive market reforms and creation of ‘Agricultural Infrastructure Fund (AIF) worth Rs. 1 lakh crore.

What are the hurdles in doubling farmers’ income?

Decreasing Profitability in agriculture sector: Profitability has been declining in recent years due to plummeting agricultural prices and rising cultivation costs. Recently, prices of critical inputs such as fuel and fertilizers have risen sharply as well. Further there have been issues in land and labour productivity on farms, post-harvest processing, agricultural research and extension, among others.

Web of Middlemen: There exists a strong web of intermediaries that enjoy maximum profit and leaves bare minimum revenue for the farmers. A major share of the income is cornered by the middlemen.

Policy Lacunae: According to many experts, the policies to achieve the growth rates have not been clearly articulated by the Centre to the states. This becomes extremely crucial considering agriculture is a State subject. In addition, there have been issues in the implementation of policy initiatives. For example, many States have opted out of PMFBY due to implementation issues.

Impact of Extreme Events: The drought of 2015 and the impact of demonetisation (2016) on farming made the targets all the more difficult to achieve. 

Unrealistic Target: The Government had targeted to raise the farmer’s income by a staggering 10.4% in real terms in between 2015-16 and 2022-23. However, this was highly improbable considering the preceding growth rates had been around 3.5% per year.

Between 2015-16 and 2021-22, the agricultural incomes have grown by only about 30% after adjusting for inflation. Agricultural incomes would have to grow by around 54% in 2022-23 for farm incomes to double from 2015-16 levels in real terms. Hence, it appears near impossible to achieve the target of doubling farmers’ income by the end of this fiscal.

What more steps can be taken?

First, the Union Government needs to lay down a clear roadmap to wean farmers away from rice and wheat towards more lucrative, high-value crops. For this, the government should do greater MSP procurement of millets and educate the masses about their higher nutritional value in comparison to rice. 

Second, there should be a focus on developing robust food processing industries in every state that will help in boosting farmers income. For instance, Gujarat has one of the largest potato processing industries. The income of potato farmers has nearly trebled in recent years.

Third, considering more than 86% of farmers are small and marginalized, measures of boosting alternative income like beekeeping, agro forestry etc. should be promoted. 

Fourth, there is a need to attract youth into agriculture by duly implementing schemes like ARYA and providing good agriculture education. The participation of youth will help in reducing the uncertainties associated with farming by acting as a bridge between state of art solutions and traditional farmers. 

Fifth, the broader measures specified by the DFI Committee and the associated reforms must be carried out.

Sixth, cooperative farming should be promoted. This will allow farmers to take advantage of economies of scale, do better risk management and enjoy a greater bargaining power. The success of AMUL is a classic example of the benefits enjoyed by cooperative farming.

Seventh, at present, Agriculture sector contributes 15% to India’s economy while employing > 40% of the workforce. Farm Incomes will be very difficult to improve without reducing the burden of population on agriculture. India must learn lessons from countries like China, Vietnam etc. that improved the situation of their agriculture sector by creating sufficient jobs in industries and services sector. This allowed many agriculture labourers and small landholders to shift in new vocations and reduce the burden on agriculture.  

Conclusion

Based on the findings of the latest Situational Assessment Survey of NSO, it should be prudent to expect doubling farmers’ income in 3-4 years beyond 2022-23. Although the Government is likely to miss the target, efforts should continue towards improving incomes and addressing farm and rural distress.

Source: Mint, Business Standard, Financial Express, PIB