INDIAN ECONOMY

CURRENT AFFAIRS, 2017

DOUBLING FARMER’S INCOME
WHY DOUBLE FARMERS' INCOME?
• Past strategy for development of the agriculture sector in India has focused
primarily on raising agricultural output and improving food security. The net
result has been a 45 per cent increase in per person food production, which
has made India not only food self-sufficient at aggregate level, but also a net
food exporting country.
• The strategy did not explicitly recognise the need to raise farmers' income and
did not mention any direct measure to promote farmers welfare. The net result
has been that farmers income remained low, which is evident from the
incidence of poverty among farm households.
• Low level of absolute income as well as large and deteriorating disparity
between income of a farmer and non-agricultural worker constitute an
important reason for the emergence of agrarian distress in the country during
1990s, which turned quite serious in some years. The country also witnessed a
sharp increase in the number of farmers suicides during 1995 to 2004 - losses
from farming, shocks in farm income and low farm income are identified as
the important factors for this. The low and highly fluctuating farm income is
causing detrimental effect on the interest in farming and farm investments, and is
also forcing more and more cultivators, particularly younger age group, to
leave farming. This can cause serious adverse effect on the future of
agriculture in the country.
• It is apparent that income earned by a farmer from agriculture is crucial to
address agrarian distress and promote farmers welfare. In this background, the
goal set to double farmers' income by 2022-23 is central to promote farmers
welfare, reduce agrarian distress and bring parity between income of
farmers and those working in non-agricultural professions.

THE CONCEPT AND TIMEFRAME

Clarity on the following points is important to assess the possibility of doubling the
income of the farmers. The substantive points are:
1. what is the period and targeted year for doubling the farm income;
2. what is to be doubled, is it output, value added or income earned by farmers
from agricultural activities;
3. whether nominal income is to be doubled or real income is to be doubled; and
4. whether the targeted income includes only income derived from agricultural
activities or would it also include income of farmers from other sources.

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 • It is obvious that the targeted year to double the current income of the farmers
or income for the agricultural year 2015-16 is by agricultural year 2022-23,
which is seven years away from the base year 2015-16. And, if anything is to
be doubled by the year 2022-23, it will require an annual growth rate of 10.4
per cent.
• Again, it is important to clarify what is sought to be doubled. Is it the income of
farmers, or the output or the income of the sector or the value added or GDP
of agriculture sector? If technology, input prices, wages and labour use could
result in per unit cost savings then famers' income would rise at a much higher
rate than the output. In nominal terms, the output became 2.65 times while
farmers' income tripled in the seven years period. Therefore, doubling of
farmers' income should not be viewed as same as doubling of farm output.
• It is obvious that if inflation in agricultural prices is high, farmers income in
nominal terms will double in a much shorter period. In a situation where non-
agricultural prices do not rise, or, rise at a very small rate, the growth in
farmers' income at real prices tends to be almost the same as in nominal
prices. The government's intention seems to be to double the income of
farmers from farming in real terms.
• It is pertinent to mention that the latest data on number of cultivators is
available only up to the year 2011-12. Therefore, while calculating per
cultivator income, it is assumed that farm workers would continue their
withdrawal from agriculture at the rate observed during 2004-05 to 2011-12.
Presently, per cultivator income has been estimated as Rs 1,20,193 at
current market prices.

SOURCES OF GROWTH IN FARMERS' INCOME

• Doubling real income of farmers till 2022-23 over the base year of 2015-16,
requires annual growth of 10.41 per cent in farmers income. This implies that
the on-going and previously achieved rate of growth in farm income has to be
sharply accelerated. Therefore, strong measures will be needed to harness all
possible sources of growth in farmers' income within as well as outside
agriculture sector.

THE MAJOR SOURCES OF GROWTH OPERATING WITHIN AGRICULTURE SECTOR

ARE:
• improvement in productivity
• resource use efficiency or saving in cost of production
• increase in cropping intensity
• diversification towards high value crops

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THE SOURCES OUTSIDE AGRICULTURE INCLUDE:
• shifting cultivators from farm to non-farm occupations, and
• improvement in terms of trade for farmers or real prices received by farmers.

RECOMMENDATION OF M.S SWAMINATHAN’S REPORT

1. Irrigation:
• enable farmers to have sustained and equitable access to water
• Increase water supply through rainwater harvesting and recharge of the
aquifer. (“Million Wells Recharge” programme)
2. Agricultural Productivity
• Substantial increase in public investment in agriculture related
infrastructure particularly in irrigation, drainage, land development, water
conservation, research development and road connectivity.
• A national network of advanced soil testing laboratories with facilities for
detection of micronutrient deficiencies.
3. Credit and Insurance
• Expand the outreach of the formal credit system to reach the really poor
and needy.
• Issue Kisan Credit Cards to women farmers, with joint pattas as collateral
• Expand crop insurance cover to cover the entire country and all crops,
with reduced premiums
• Competitiveness of Farmers.
• Improvement in implementation of Minimum Support Price (MSP).
Arrangements for MSP need to be put in place for crops other than paddy and
wheat. Also, millets and other nutritious cereals should be permanently
included in the PDS.
• MSP should be at least 50% more than the weighted average cost of
production.

STRATEGY FOR IMPROVING FARMERS' INCOME

The sources of growth in output and income can be put in four categories.
• Development initiatives including infrastructure
• Technology
• Policies and
• Institutional mechanisms

INCREASING INCOMES BY IMPROVING PRODUCTIVITY

• Biotechnology is set to play critical role in crop and livestock production by
enhancing yields, nutritional profile, stress tolerance and crop protection. India
must have a clear vision of the GM crops. The policy support accordingly be
provided for the development of seed and biotech industry in the country. As per

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 studies BT cotton alone has contributed more than Rs. 80,000 crores of
additional output value to farmers. Similar potential many other crops may
have for Indian agriculture and towards enhancing farmers profitability. Besides
preparing Vision Document on Biotechnology, passing the BRAI bill in the
Parliament, which can facilitate greater investments and faster rollout of
biotech products, while ensuring compliance of bio-safety measures.
• Improving agricultural productivity in rain fed regions of India, which
constitutes more than 50% of the country‘s arable land. Besides watershed
management, constructing check dams and farm ponds should be taken up in
a mission mode for providing life saving irrigation for the crops. Chandrababu
Naidu Committee report (2003) need to be revalidated and implemented for
bringing 69 million hectare area under Micro-Irrigation to save water and input
costs, increase productivity and improve quality of output. The area expansion
and subsidy to the States must be linked with the adoption of precision
agriculture model.
• Bridging yield gaps among the States is important in improving national
productivity i.e. the gap in rice yields almost 3 times between Punjab and
Chhattisgarh. There is urgent need for developing a strategy document for
assessing the present trends of crop productivity vis-a-vis the potential
yield of major crop systems, so that specific action plans can be taken up for
bridging the yield gaps, which in turn will contribute to enhanced productivity of
farming systems. Increased Budget on Farmers Inter-State Exposure Visits and
Training Scheme of MoA. This is a powerful scheme towards helping farmer
bridge the yield gap.

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WATER AND INPUTS
• Fertilizer Subsidy and Rationalizing the NPK pricing for maintaining NPK
ratio in the soil and better application technologies to improve efficiency and
reduce fertilizer subsidy by Rs. 25,000 – 30,000 crores annually. Policy on
promoting crop specific speciality fertilisers and fertigation, besides setting
standards and regulating bio-fertilisers under Soil Health Mission is needed.
Since the year 2010, NP / NPK fertilisers have been reformed and put under
Nutrient Based Subsidy (NBS) whereas Urea continues under direct control.
Consequently, the gap in MRP of Urea and NP / NPK fertilisers has been
widening. Therefore, unless corrections are made in the fertiliser policies, the
benefit of soil health card will not be realised. And desired increase in yields in
major crops will continue to delude the nation.
• Crop losses in India are huge and estimates range from Rs. 90,000 to Rs. 1.50
lac crores annually. Pesticides play an important role not only in protecting
crops from pests and diseases but also in crop productivity, cost reduction and
quality improvement. The cost benefit ratio in using pesticides is heavily in
favour of farmers. The Government however needs to check flood of spurious
pesticides in market by fly-by-night operators by regulating registrations,
strengthening quality enforcement and tackling corruption through provisions of
joint testing of samples.
• Farm Mechanisation in India has been a story of tractorisation. Time has come
to promoting efficient equipments and tools and small engine driven tractors to
address small farm requirements adequately. Through a mix of specialised
Custom Hiring Centres (CHCs) and with State Agros, Cooperatives and
input dealers. Developing and Custom hiring facility in farm mechanization
should be given high focus. Through MANAGE network of ACABCs, Custom
Hiring Centres can be promoted effectively by enhanced incentivisation and by
provisioning to hire agribusiness consulting companies by MANAGE / States for
promoting CHCs among ACABCs.
• There is a need for integrated water use policy. India should critically examine
several ongoing initiatives and develop its country-wide system for judicious and
integrated use and management of water. A national commission on efficient
water use in agriculture should be established to assess the various issues,
regulatory concerns, water laws and legislations, research, technology
development and community involvement. This will especially help resource-
poor farmers in the rainfed ecosystems, who practice less-intensive agriculture.
• Farmers however need to be educated on water usage systems to drift them
away from flood irrigation systems, which affects productivity and wastes water.
The most important part is the crops planning, which needs to be done keeping
water resources of a region and the water intake by various crops in mind. For

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 example high water consuming crops like paddy and sugarcane should be
grown in high rainfall areas.

ROADMAP AND ACTION PLAN

The quantitative framework for doubling farmers income has identified seven
sources of growth. These are:
• The first step is to increase productivity. It means focusing on irrigation, and
that is why we have increased the irrigation budget. India has 142 million
hectares agriculture land, out of which only 48% is under institutional
irrigation. With the objective of providing water to every field, Pradhan Mantri
Krishi Sinchai Yojana was launched on July 1, 2015, and, to provide an end-to-
end solution in irrigation supply chains, water resources, network distribution as
well as farm level application. We have adopted a comprehensive approach, one
that combines irrigation with water preservation. The objective is More Crop Per
Drop. In addition, the aim is to complete pending medium and large irrigation
projects on a priority basis in the next four years. Water harvesting,
management, and watershed development projects have been put on the fast-
track.
• The second factor is effective use of inputs, which means increasing
production through improved seeds, planting materials, organic farming, soil
health card and other schemes. For the first time, a scheme has been launched
for organic farming. Similarly, the government has curbed illegal use of urea
and ensured its adequate supply through Neem-Coated Urea scheme. In
addition, the Soil Health Card Scheme has helped reduce cultivation cost and
increase production by curbing misuse of fertilisers. Farmers are also getting
timely information and advisory services through new technologies such as
space technology and online and telecom facilities via the Kisan Call
Centre and Kisan Suvidha App.
• The next critical factor is reducing post-harvest losses. One of the biggest
problems of farmers is storage after harvesting; as a result, they are forced to
sell their products at a lower cost. Therefore, the government is encouraging
farmers to use warehouses and avoid distress sales. Loans against
negotiable warehouse receipts are being provided with interest subvention
benefits. The focus is on storage facilities and integrated cold chains in rural
areas.
• Value addition is being encouraged as a critical factor for augmenting income.
The government has launched the Pradhan Mantri Kisan Sampada Yojana.
Under this, food-processing capabilities will be developed by working on forward
and backward linkages of agro-processing, benefitting 20 lakh farmers and
creating employment opportunities for about 5 lakh.

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• In agriculture marketing, The electronic-National Agriculture Market has been
launched with three reforms and so far, 455 mandis have been linked to it.
Online trading has begun on various mandis. In addition, a model APMC Act has
been circulated, which includes private market yards and direct marketing.
Farmers are also being organised as Farmer Producer Organization. This helps
them achieve economy of scale and increase bargaining power.
• The Pradhan Mantri Fasal Bima Yojana (PMFBY) helps reduce the possible
risks. The scheme is a shield for farmers’ income. The lowest rate has been
fixed for kharif and rabi crops. Maximum rate is 2% and 1.5%, respectively.
The scheme covers standing crops as well as pre-sowing to post-harvesting
losses, and 25% of the claim is settled immediately online. Under PMFBY, many
states are using remote sensing technology and drones to estimate losses and
settle claims. To reduce climate change impact, various tolerant species and
animal species have been developed. Contingency plans for affected districts
have also been prepared.
• Focus on agri-allied activities is critical. We are focusing on horticulture,
dairy, poultry, beekeeping, fisheries, white revolution, blue revolution,
agroforestry, integrated farming and rural backyard poultry development to
increase the income of the farmers. We will increase the income of farmers
through allied activities. Partially, it will be done through poultry, beekeeping,
animal husbandry, dairy development, and fishery. We are encouraging farmers
to utilise uncultivated areas for peripheral and boundary plantation to grow trees
for wood and to produce solar cells. We are also emphasising on horticulture,
agro-forestry, and integrated agriculture.

SPECIAL MEASURES
• Structural reforms in agriculture pertaining to land leasing and market restrictions
need to be addressed. The market regulation on movement and
procurements by private players is hampering market growth and prices
realization by farmers. Similarly due to land leasing policies of State
Governments the concept of contract farming is not successful. The experiments
of contract farming are based on "win all", bringing value to all partners in
operations. This needs to be encouraged on a large scale.
• Through a nationwide crops competitiveness study, States’ profiling of crops
and animal resources should be done, indexing them against national and
global benchmarks on cost, quality and productivity parameters, and their short,
medium and long term strategic advantages. Based on this national indexing
and estimation of market demands in short, medium and log terms national crop
planning needs to be done. If India has to succeed in global market on a long
term basis, this task is unavoidable.

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• Agriculture to be brought to the Concurrent List: Bringing the entire gamut of
post production activities in agriculture, such as PHM, marketing, processing,
infrastructure, agribusiness etc. under the concurrent list of the Constitution for
better central planning, as the business of food and agriculture is globalizing and
role of central Government is increasing in making laws and policies, especially
in post harvest, trade and agribusinesses, where MNCs and corporate sector is
involved in big way.
• Review of current scenario of farm credit and subsidy disbursement system.
All financial benefits, mainly the subsidies in different forms, should be provided
and transferred directly to farmers account through e-governance through which
tracking of farmers’ application, status and approval of all schemes is available
online. Gradually phase out all subsidies including fertiliser and only
transfer money to farmers, calculating aggregate measure of support. This
improves efficiency of govt investments.
• Implementing ambitious Agribusiness Hubs Model, operating on a national
platform and establishing 2.40 lac multi-functional Agribusiness hubs in all the
Gram Panchayats of the country. This will revolutionize the farm economy and
create jobs. The project outlines creating 10.0 million jobs, 50,000 crores of
additional annual farm value, providing increased market opportunities of Rs.
50,000 crores and initiating various multifarious socio-economic activities, aimed
at improving farm incomes.
• ICT-based agricultural extension brings incredible opportunities and has the
potential of enabling the empowerment of farming communities. Information
technology can support better crop, fertilizer and pesticide use planning as well
as disease monitoring and prevention, both in crops and animal
husbandry, besides improving farmers’ operational and financial management
and to effectively connect them with the markets for better price realisation.
• Diversification of agriculture in the First Green Revolution areas such as
Punjab, Haryana and Western U.P. seems need of the hour. To promote
diversification on ecological principles, will require making monetary equivalence
(profit margin) between the replaced crop/commodity and enterprise with the
ones planned to be introduced. Farmer is mainly concerned with the profit he
gets from a particular crop or commodity. Crops like maize, soybean, pulses,
oilseeds, fruits and vegetables have the potential to replace rice and wheat in
this area. Upward push in MSP in favour of proposed diversification crops will
be a practical option to achieve this objective.
• Integrating all central and state subsidies, instead of reducing costs of inputs,
need to be targeted to empower farmers through infrastructure development in
rural areas to promote agribusiness, food processing, water management, soil
health enhancement, seed production and processing, custom hiring, plant

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 protection, dairy, poultry, fisheries and enterprises etc. This will boost up
agriculture sustainability and farms profitability.
• Strengthening Organic Food Program for India to make 10% of the global 60
billion USD market for each. Major parts of India such as NER, HP, J&K,
Uttarakhand, MP, Chhatisgarh, Jharkhand, which are organic by default, must
be made Organic by Process for the producers to get advantage of market
value.

• Establishing Special Agriculture Zones (SAZ) by selecting export oriented

and industrial use crops. Promoting Crop Stewardship Programs, GAP and
Certification, formation of Global Commodity Boards, on the pattern of California
Walnuts, Washington Apples etc., can help double in 5 years the current level of
1.70 lac crores of agri exports, which will benefit farmers significantly.
• Promoting scientific agriculture micro-irrigation on a very large scale. Micro
irrigation along with the nutrient application can be highly efficient and priority
should be given to empower farmers with micro irrigation. Advanced concept of
Precision Agriculture need to be promoted on a large scale, emulating the
success of TN Precision Farming Project. A National Project on Precision
Agriculture on the pattern of TNPFP should be launched with integrated
approach from advance production technologies to formation of FPOs and
linking them with the markets. Studies done by LSE, Harvard, IIM-A and other
premier global institutions show an increase of 80% to 600% extra yields in
different crops under Tamil Nadu Precision farming Project.

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• Provide affordable health insurance and revitalize primary healthcare
centres. The National Rural Health Mission should be extended to suicide
hotspot locations on priority basis.
• Set up State level Farmers’ Commission with representation of farmers for
ensuring dynamic government response to farmers’ problems.
• Restructure microfinance policies to serve as Livelihood Finance, i.e. credit
coupled with support services in the areas of technology, management and
markets.
• Cover all crops by crop insurance with the village and not block as the unit for
assessment.
• Provide for a Social Security net with provision for old age support and health
insurance.
• Promote aquifer recharge and rain water conservation. Decentralise water
use planning and every village should aim at Jal Swaraj with Gram Sabhas
serving as Pani Panchayats.
• Ensure availability of quality seed and other inputs at affordable costs and at
the right time and place.
• Recommend low risk and low cost technologies which can help to provide
maximum income.
• Need for focused Market Intervention Schemes (MIS) in the case of life-saving
crops such as cumin in arid areas. Have a Price Stabilisation Fund in place to
protect the farmers from price fluctuations.
• Need swift action on import duties to protect farmers from international
price.
• Set up Village Knowledge Centres (VKCs) or Gyan Chaupals in the farmers’
distress hotspots. These can provide dynamic and demand driven information on
all aspects of agricultural and non-farm livelihoods and also serve as guidance
centres.

CONCLUSION
• The low level of farmers income and year to year fluctuations in it are a major
source of agrarian distress. This distress is spreading and getting severe over
time impacting almost half of the population of the country that is dependent
on farming for livelihood. Persistent low level of farmers income can also cause
serious adverse effect on the future of agriculture in the country. To secure
future of agriculture and to improve livelihood of half of India's population,
adequate attention needs to be given to improve the welfare of farmers and raise
agricultural income. Achieving this goal will reduce persistent disparity between
farm and non-farm income, alleviate agrarian distress, promote inclusive growth
and infuse dynamism in the agriculture sector. Respectable income in farm

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 sector will also attract youth towards farming profession and ease the
pressure on non-farm jobs, which are not growing as per the expectations.

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