Doubling India’s Farmers Income | 09 Mar 2023

In 2016, India’s Prime Minister shared his dream of doubling farmers’ incomes in the year when India completes 75 years of Independence and enters Amrit Kaal. Now that we have entered Amrit Kaal, it is a good time to revisit that dream and see if it has been fulfilled, and if not, how best it can be done.

Unless the incomes of farmers go up, we cannot have sustained high growth of overall GDP. This is because the manufacturing sector starts facing a demand constraint soon after meeting the demand of well-off urban consumers.

Agriculture engages the largest share of the workforce (45.5% in 2021-22 as per Periodic Labour Force Survey). So, focusing on agriculture, even if it was in a dream, is the right way to ensure long-term high growth of the overall economy.

Agriculture also has to provide food and nutritional security to the largest population on this planet. However, if this objective has to be achieved in today’s context, it must encompass policies that also protect the basic resources of this planet, say soil, water, air, and biodiversity.

What are the Issues with Doubling Farmers Income?

• Issues with Agricultural Policies:
  • Trade and marketing policies adopted by the government are suppressing farmers’ incomes.
  • For Example: The ban on exports, the suspension of several commodities from the futures markets, and the imposition of stocking limits on certain commodities.
  • These are hidden policy instruments of “implicit taxation” of farmers’ incomes.
  • The policy of heavy subsidisation along with assured and open-ended procurement of paddy and wheat is creating challenges for the environment.
• Fragmentation of Land:
  • Land fragmentation is a significant issue in India. Small and marginal farmers who own less than two hectares of land constitute around 85% of the total number of farmers in India.
  • This fragmentation of land limits the scale of agricultural operations, making it difficult to achieve economies of scale.
• Poor Infrastructure:
  • India has a weak agricultural infrastructure, including inadequate irrigation facilities, poor storage facilities, and weak transportation networks. This results in poor-quality produce, wastage, and low returns to farmers.
• Low Productivity:
  • The productivity of Indian agriculture is low compared to other countries. The yield per hectare of major crops in India is lower than that of China, Brazil, and the United States.
• Climate Change:
  • Climate change has a significant impact on Indian agriculture. Erratic rainfall, rising temperatures, and extreme weather events such as droughts and floods affect crop production and reduce farmers' income.
• Price Volatility:
  • The agriculture sector in India is characterized by price volatility due to the lack of a stable pricing policy.
  • Fluctuations in prices of agricultural commodities, coupled with high input costs, make it difficult for farmers to plan their production and marketing strategies.
• Inadequate Institutional Support:
  • The lack of institutional support in the form of credit, insurance, and marketing facilities for farmers is a significant challenge.
  • Access to credit and insurance remains low for small and marginal farmers.
• Dependence on Monsoon:
  • A large proportion of Indian agriculture is dependent on monsoon rains.
  • Delayed or inadequate rainfall affects crop production and farmers' income.

What should be the Way Forward?

• Realignment of Support Policies:
  • The government should incentivize the cultivation of crops that are environmentally friendly and consume fewer resources such as water and fertilizers.
  • Millets, pulses, oilseeds, and horticulture crops could be given carbon credits to encourage their cultivation.
  • The subsidies/support should be crop-neutral or skewed in favor of the crops that are beneficial for the planet's resources.
• Promotion of High-Value Crops:
  • Farmers should diversify their crops to include high-value crops that have better market demand and can fetch higher prices.
  • This can be done by introducing better seeds, irrigation techniques, and training on sustainable farming practices.
• Collaboration with Corporations:
  • The government can collaborate with corporations to provide farmers with better market access and an assured buyback arrangement to reduce their market risk.
  • Corporations can also offer farmers better prices for their produce by using them for making value-added products such as tofu, soya milk powder, soya ice cream, and frozen soya yoghurt.
• Technological Innovation:
  • The government should invest in research and development to come up with new technologies that can help farmers increase their productivity and profitability. This can include the use of solar panels on farmers' fields as a third crop.