• Ashok Gulati, chair professor for agriculture at ICRIER, wrote an article titled ‘How To Double India’s Farmers’ Income’ published in The Indian Express on 6th March 2023.
• On February 28, 2016, Prime Minister Narendra Modi shared his dream of doubling farmers’ incomes in the year when India completes 75 years of Independence and enters Amrit Kaal.
• Now that India has 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.

Need to double India’s farmers’ income

• Sustained high growth: Unless the incomes of farmers go up, we cannot have sustained high growth of overall GDP. It is the right way to ensure long-term high growth of the overall economy.
• Food and nutritional security: Agriculture also provides food and nutritional security to the largest population on this planet.
• Employment: Agriculture engages the largest share of the workforce (45.5 percent in 2021-22 as per PLFS).

Challenges

• Rising cost of Production: The cultivation costs have almost doubled, and their income is not commensurate with the rising inflation.
• Income from wages for farmers was 32 per cent in 2012-13. It was recorded to be 40 per cent in 2018-19. This implies that farmers are turning into daily wage labourers.
• MSP: Only 14 percent of 14.6 crore landholding farmers (2015-16) getting benefits from the MSP, most farmers are out of the MSP net and continue to sell their produce below the MSP.
• MSP has distorted cropping patterns, with excessive focus on the cultivation of wheat, rice, and sugarcane in the procurement states at the expense of other crops such as pulses, oilseed, and coarse grains.
• Policies of Government: Marketing policies adopted by the government that suppress farmers’ incomes.
• For instance, the ban on exports of wheat or the 20 percent export tax on rice, the suspension of several commodities from the futures markets, and the imposition of stocking limits on certain commodities from time to time.
• The recent dumping of 2.5 MMT of wheat to bring down prices in mandis just before the procurement so that the government can buy at the Minimum Support Price, which is lower than the market price.
• These are hidden policy instruments of “implicit taxation” of farmers’ incomes.
• Fragmentation of land holdings: Fragmentation of land holding decreases agricultural productivity and diminishes the economic opportunities available.
• Area under Irrigation: The irrigated area in India is still limited to 34.4 percent which is less than the wholly unirrigated area of 38.6 percent.
• Climatic factors: Rising temperatures along with increased occurrences of extreme weather conditions have made climate change a major threat to Indian agriculture and productivity loss.
• Poor usage of machinery: In India, the average farm size is less than two hectares. It is difficult for farmers to use heavy equipment on such small farms.
• Agricultural waste management: Burnings of agricultural residue in the northern states increase air pollution levels, create health hazards and contribute to global warming.
• Supply-side issues: low public investments, inadequate cold storage capacity, and the nascent food processing industry are partly responsible for volatility in food prices in India.
• Policy paralysis: As agriculture marketing is a state subject, there is no consensus and coordination among central and state governments to address the marketing issues as a holistic approach.

Steps taken by the government to support farmers

• The price of urea in India stayed constant at about $70 per metric tonne despite the fact that global price reached $1,000. There is also the additional Rs 60,000 crore from PM Kisan.
• Also, through the PM Garib Kalyan Anna Yojana, many small and marginal farmers receive free rations of at least 5 kg per person every month.
• In addition, there are subsidies for finance, irrigation (drip), and crop insurance.
• States also dole out power subsidies in abundance, especially on irrigation.
• All this if combined, would easily cross Rs 4 lakh crore per annum.

Negative Impact of subsidies

• The policy of heavy subsidisation of input subsidies, especially fertilisers and power, along with assured and open-ended procurement of paddy and wheat at least in some selected states, is affecting the environment negatively.
• Depletion of groundwater levels.
• Overconsumption of fertilisers and pesticides.

Steps to be taken

• Increasing total output across the agricultural sub-sectors through realising higher productivity
• Rationalizing/reducing the cost of production
• Ensuring remunerative prices in the agricultural produce
• Effective risk management
• Adoption of sustainable technologies
• Audit of agricultural subsidies: CAG should take up the audit of all subsidies given by the Centre and by the states to examine their outcomes in terms of the incomes of farmers and environmental consequences. The results of such an audit can induce us to streamline these policies
• Ecofriendly policies: Supporting policies are to be realigned keeping environmental outcomes for instance Millets, pulses, oilseeds, and much of horticulture could perhaps be given carbon credits to incentivise their cultivation. They consume less water and fertilisers.
• Crop neutral subsidies: Subsidies/support should be in favour of those crops that are benign to the planet’s basic resources.
• Contract farming: It is an agreement between farmers and processing and/or marketing firms for the production and supply of agricultural products under forward agreements, frequently at predetermined prices.
• For instance, a corporate in Madhya Pradesh is buying soybean at Rs 6,000/quintal, way above the MSP of Rs 4,300/quintal to make tofu, soya milk powder, soya ice cream, and even frozen soya yoghurt.

Looking ahead

• According to experts the government schemes will not help farmers double their income unless the government policies on agriculture are comprehensive, grant freedom of technology and market, and infuse more money into infrastructure development.
• Ad hoc policies and schemes will not help farmers as long as the government intervenes in the market to control prices to keep the consumers happy at the cost of farmers.
• Innovations in technologies, products, institutions, and policies for more diversified high-value agriculture that is also planet friendly are needed for doubling farmers’ income.
• Additionally, diversifying to high-value crops, and even putting solar panels on farmers’ fields as a third crop will be needed. It is only with such a concerted and sustained effort one hopes to double farmers’ incomes.