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Business News/ Opinion / Columns/  We did not manage to double the income of Indian farmers

We did not manage to double the income of Indian farmers

Multiple surveys indicate that we not only missed that goal but our rural economy is in deep distress

Photo: Mint

On 28 February 2016, at a farmer rally in Bareilly, Uttar Pradesh, Prime Minister Narendra Modi announced the government’s intention of doubling the income of farmers by 2022, a year marking 75 years of India’s independence. That it was not just political rhetoric but a real project was evident from the follow-up. An expert committee headed by Ashok Dalwai submitted a report on Doubling Farmers’ Income (DFI) in 14 volumes.

While the aim is welcome and has been reiterated several times by government functionaries, there is no clarity on who a ‘farmer’ is and what is meant by farmer’s income. Immediately after the announcement, Niti Aayog brought out a policy paper (policy paper no.1/2017) authored by Ramesh Chand, member in-charge of agriculture, providing benchmark estimates of farmers’ incomes and details on doubling these. This was a straightforward calculation of what constitutes farmers’ income and has been used earlier in academic studies. The policy paper had estimates of incomes of cultivators until 2015-16, which was treated as the base year. By its data, real farm income per cultivator had increased by a paltry 0.44% per year between 2011-12 and 2015-16, as against a 7.5% increase between 2004-05 and 2011-12. It had declined 0.55% per year between 1999-00 and 2004-05, during the term of the first National Democratic Alliance (NDA-1) government.

So, what happened with the farm income of cultivators now that 2022 has come to a close? Between 2016-17 and 2020-21, the last year for which data is available, it declined 1.5% per annum, three times faster than it did during the agrarian crisis under NDA-1. Using 2015-16 as the base year, a year that saw a second successive drought, does improve the result to 0.6% annual growth between 2015-16 and 2020-21. Data for 2021-22 is not available, but it is clear that even if farm incomes grow at very high rates, it will need a miracle for them to reach the level of 2016-17.

The Dalwai panel adopted a different approach and a broader definition of ‘farmer’ used by the Situation Assessment Survey (SAS) of the National Statistical Office (NSO). It also used all the income of such households for defining the target of doubling farmers’ incomes. This included non-farm incomes from businesses and the labour wages of farmer households. The most recent NSO survey of farmers is for 2018-19. Prior to that, it was in 2012-13. Nonetheless, based on the SAS, the income of farmer households from crop cultivation declined 1.5% per annum between 2012-13 and 2018-19, similar to what was reported by the national accounts method. The income of farmers does rise, albeit barely by 0.6% per annum, when livestock income is included. On adding non-farm income, it shows a growth of 2.8% per annum. Much of this increase in income is thanks to the non-farm intake of farmer households. Unfortunately, there is no way to estimate farmers’ incomes in 2022, as there have been no surveys after 2018-19 and there is unlikely to be one for some time, given that these are generally decennial. The only other source of data on income of agricultural households is the survey of rural households as part of the NABARD All India Financial Inclusion Survey (NAFIS), which provides incomes for 2015-16. Although its definition of agricultural households and income differs from the SAS’s, it found that the income of agricultural households from all sources increased 1.7% per annum between 2015-16 and 2018-19, less than half the 3.8% growth rate of the prior period between 2012-13 and 2015-16.

It is unlikely that we will have a robust estimate of what happened to farmers’ income in the last five years, given our lack of data. But based on whatever little one can infer using multiple sources, there has been a deceleration in farmer incomes after 2015-16, irrespective of the source or method.

The issue here is not only the trend in farmers’ income, in particular from agriculture, but also what is happening in India’s broader rural economy. With rural real wages also declining in the last five years, even wage workers have not seen any growth in their incomes. Three-fourths of rural workers are witnessing a decline in income. This is likely to deepen the rural stress. While this has an impact on lives and livelihood, given spiralling inflation this year, it has also deepened a crisis in our economy that is suffering a demand deficiency. Therefore, for any meaningful plan aimed at an economic revival next year, prioritizing the revival of India’s rural economy is not just desirable, but a necessity.

Himanshu is associate professor at Jawaharlal Nehru University and visiting fellow at the Centre de Sciences Humaines, New Delhi

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