Mumbai: Protests by farmers across India amid bumper harvests have surprised many. The biggest source of surprise has been one of the hotspots of the protests, Madhya Pradesh (MP), a state that has posted record agricultural growth over the past several years.
A Mint analysis shows that although farmers have gained from the state’s rapid agricultural growth over the past decade, the income of an average farm household in the state still remains among the lowest in the country. Between 2000-01 and 2014-15, agri-GDP (gross domestic product) for MP grew at an annual average rate of 9.4%, second only to Gujarat at 9.5%. This is far higher than the all-India average of 3.3% between 2000-01 and 2012-13.
The rapid growth has boosted farm earnings, or earnings from cultivation, in the state. The average agricultural household in MP has seen monthly farm earnings rising at an annual pace of 15% between 2002-03 and 2012-13 to Rs4,016 as per data from National Sample Survey Office’s (NSSO) survey of farm households for the respective years. Inflation rose at an annual pace of nearly 8%, and hence real earnings grew at roughly half the pace at which nominal earnings grew. Over the same period, farm earnings of the average Indian farm household rose at an annual pace of 12.3% to Rs3,081.
The data shows despite the boost in farm earnings, average total earnings of agricultural households in MP continue to lag the national average, suggesting that other earnings (from labour, and from non-farm activities) have not risen fast enough. See Chart 2. One caveat here is there is a slight difference in the manner in which agricultural households have been chosen in these two surveys. In the 2002-03 survey, only land-owners were considered in farm households. The latest survey included households with at least one member self-employed in agriculture, and which generated total agricultural produce of Rs3,000 or more over the past year.
The average figures, however, mask the unequal distribution of farm incomes in the state. As per figures computed by the erstwhile Planning Commission, rural inequality (as measured by the Gini coefficient) rose faster in MP than in the rest of the country between 2004-05 and 2011-12. According to the Planning Commission data, the Gini coefficient for rural areas in the state increased from 0.237 in 2004-05 to 0.276 in 2009-10. Over the same period, the Gini coefficient for rural India rose from 0.266 to 0.276. The Gini coefficient is a measure of inequality where 0 stands for perfect equality and 1, perfect inequality.
The skewed pattern of rural growth is also reflected in the pattern of wage growth in the state. The gap in real rural wages (wages adjusted for inflation) between Madhya Pradesh and the rest of the country continues to be nearly as high as it was in the early 2000s.
This means that small and marginal farmers, who often tend to work as agricultural labourers , have not seen a significant rise in their incomes over this period. While MP’s farm performance is impressive, the distribution of gains seems to have been inadequate and unequal.
This is the fifth in Mint’s Fractured Farms-II series that will capture the ongoing agrarian crisis in India through a mix of on-ground reports, opinion pieces and data analyses. It follows Fractured Farms, a similar series Mint ran in 2015.