Doubling Farmers’ Income by 2022: Where do we stand?
Prof. (Dr.) M. K. Ghadoliya*
ABSTRACT
Many
schemes have been launched to reduce farmers’ distress yet the conditions of
farmers have not shown significant improvement. It is therefore necessary to assess
the new slogan and scheme of the government to Double Farmers’ Income (DFI) by
2022. The Economic theory gives two distinct approaches of growth i.e. Balanced
Growth Vs Unbalanced Growth. Our planners chose the second option and argued
that agriculture is in very poor stage so it cannot be developed as leading
sector of the economy. We gave much emphasis on basic and heavy industries
sector arguing that once industrial sector develops it will benefit agriculture
through it backward and forward linkages. The emphasis on agriculture in third
five year plan was a necessity as we were at the starvation stage but even then
terms of trade always remained against agriculture.
The
present government has for the first time took a paradigm shift and focused on doubling
farmers’ income and his welfare from agricultural growth. Agriculture
contributes nearly 15% to GDP but provides employment to nearly 48 percent of
Indian workforce. This indicates that agriculture is overcrowded perhaps this
is the root cause of poverty, farmers’ distress and increasing farmers’ suicides.
Some experts doubt the target of DFI and refer it as impossible and
unrealistic. (Gulati 2016)
A
holistic approach for the development of agriculture sector was therefore
followed by introducing multiple reforms such as: improvement in crop
productivity; improvement in livestock productivity; resource use efficiency or
savings in the cost of production; increase in the cropping intensity;
diversification towards high value crops; improvement in real prices received
by farmers; and shift from farm to non-farm occupations". The paper makes
an attempt to review the work done so far on these parameters so that if needed
corrective action may be initiated in time.
Key
Words:
Balance
Growth; Unbalanced Growth; Backward and forward linkages; productivity; input cost; investment;
farmers’ welfare; Green Revolution; Soil health; cropping intensity; livestock
productivity; diversification; non-farm occupation; micro irrigation, e-NAM;
post- harvest infrastructure and value addition.
_____________________________________________
*Vice
Chancellor
Shri
Khushal Das University, Pilibanga,
Hanumangarh (Raj.)
International
Conference on “ Innovative Research on Science, Humanities, Engineering &
Management (IC-IRSHEM-2020) jointly organised by Shri Khushal Das University,
Pilibanga, Hanumangarh and Research Foundation of India on 15-16 Feb 2020.
INTRODUCTION:
Reduce the yield risk and price risks are two
important milestones in the journey of Doubling the Farmers’ Income (DFI) in
next few years. Many governments have launched a numerous schemes to reduce
farmers’ distress and increase their welfare during more than past seven
decades. These include diversification of crops, using new technologies,
agricultural extension services to disseminate knowledge to farmers, increase
in irrigation facilities, rural roads, and other public investment in agriculture.
Yet during the last few years issue of farmers’ suicides have necessitated
policy revisit and assess ourselves as where exactly do we stand and what is
the way ahead.
The present government has for the
first time took a paradigm shift and focused on farmers’ income and their
welfare through agricultural growth. For the first time we heard that the
government wish to double farmers’ income by 2022 to mark 75th year
of India’s independence.
In pure economic theory we have
heard of two distinct development approaches; Balanced Growth, and Unbalanced
Growth. In balanced growth it is believed that the growth of various sectors
and regions in underdeveloped countries needs large investments simultaneously
the theory was pioneered by Ragnar Nurkse. In contrast to this Hirschman gave
his thesis of unbalanced growth. The theory emphasises on investments in
strategic sectors of the economy instead of all the sectors
simultaneously. According to this theory
other sectors would develop automatically through sectoral linkages. Following
this theory our planners thought that being in a very backward and poor stage
agricultural could not become a leading sector due to its weak backward and
forward linkages and followed the path of heavy industrialisation following
Mahalanobis Model in the Second Five Year Plan.
Although it was always said that
agriculture sector plays a pivotal role in the economy but there was a parallel
view that increase in terms of trade in favour of agriculture would reduce
profits for industry (Lewis, 1954). Therefore never we made a serious effort to
make Terms of Trade in favour of agriculture. Look at the statistics
agriculture contributes nearly 15% to GDP but provides employment to nearly 48
percent of Indian workforce. This is the root cause of poverty and agrarian
distress and large number of farmer’s suicides in some parts of the country.
The emphasis on agriculture after
the third five year plan in the name of Green Revolution was a necessity rather
than policy shift in favour of agriculture. But the success of Green Revolution
helped India to achieve self sufficiency in food grains particularly in rice
and wheat. But, soon it was recognised that we have to move beyond green
revolution as it has neglected rain fed areas, nutrition crops like millets,
non–cereals and resource poor farmers. It has also created ecological and
environmental sustainability problems. Low farm income led to farmers’
agitations in many states of India.
A holistic approach for the
development of agriculture sector was therefore necessary to follow.
Accordingly, doubling farm income (DFI) requires initiating multiple reforms
and programmes which includes the following aspects1:
1)
Increase
in productivity/ production and reduce losses
2)
Increase
market access of agriculture produce through marketing reforms, post harvest
infrastructure and value addition
3)
Reduce
input costs of farmers through optimisation of resources used as inputs.
4)
Undertake
governance and reforms.
5)
Expand
risk mitigation measures to protect farmers against losses due to yield and
price risks.
6)
Increase
investment in and for agriculture
7)
Link
development activities in sectors such as water resources, soil health, food
processing, rural development, power, information technology, environment,
fertilisers, and other sectors to agricultural development.
8)
Address
background risks through initiatives such as Ayushman Bharat, Ujjawala, Poshan
Abhiyan, Pradhan Mantri Matru Vandana Yojana, Sukanya Samriddhi Yojana, Beti
Bachao Beto Padhao, Pradhan Mantri Awas Yojana, Swatch Bharat Mission and
Mission Indradhanush.
Let us discuss
some of these important pillars:
(1) INCREASE IN OUTPUT
AND PRODUCTIVITY:
The agricultural output
can be raised either by raising agricultural productivity or by bringing more
land under cultivation. The possibility of second option is negligible
therefore we will have to concentrate on increasing productivity. Agricultural
productivity of crop sector increased at the rate of 3.1 per cent during 2000-01
to 2013-14. If the same rate continues
it will contribute about 16.7 per cent increase in total farm income in seven
years i.e. 2015-16 to 2022-23. Live stock constitutes nearly 30 per cent of the
total income from agricultural sector. This sector has shown growth rate of 4.5
per cent during 2000-01 to 2013-14. Thus, it will contribute 10.7 % in the
seven years (Chand, Ramesh 2017 p. 15)
With regard to
increasing productivity and production what has been achieved during past few
years. The total production of food grains which was 264 Million Tonnes (MT) in
the year 2014-15 increased to 291 MT during 2018-19 showing an increase of
about 10.2 percent.
Similarly, increase in
total factor productivity and diversification towards high value crops offers a
great scope in raising the income. The production of fruits and vegetables
increased by about 18.86 per cent during the same period from 265 MT to 315 MT.
Milk, production fish production, and other agricultural commodities have also
shown upward trend so broadly speaking the strategy of realising higher output
through productivity growth has been on the right track.
(2)
REDUCING COST OF PRODUCTION:
As
for reducing cost of cultivation, the two important initiatives of the
government are (i) the introduction of soil health card, and (ii) use of micro
irrigation. The soil health card saves application of chemical fertilisers thus
reduce cot of cultivation and raise productivity if farmers follow the advice
of scientists, similarly use of micro irrigation techniques saves water. The
newly introduced neem coated urea reduces the amount of urea in the
crops. Thus work is under progress on this important pillar also.
(3)
MARKETING:
Creation
of National Agriculture Market Scheme (e-NAM) and integration of mandies with e-NAM, Development and up gradation of 22000 rural markets haats, is important in providing best possible price
to farmers. Already 585 markets are on
board. A Committee of Chief Ministers of states to transform agricultural
credit has also been set up. The amount of agriculture credit which was 8.2
lakh crore in the year 2014-15 has gone up to 11.5 lakh crore in the year
2018-19. The government has adopted the recommendations of the Swaminathan
Commission (Principle of 50% margin of profit for all crops) for determination
of MSP for addressing yield risks and providing reasonable return to farmers.
No doubt there are economic arguments against the very concept of MSP there are
issues of imperfect markets and risk of survival faced by poor farmers. In
medium terms till workable alternatives are put in place, it is reasonably good
for farmers.
Government has also tried to address the issue of
price risks through creation of buffer stock of pulses, passing of Contract
Farming Act, Agricultural Land Leasing Act, and covering nearly 50% of the
population under Pradhan Mantri Fasal Bima Yojana (PMFBY) by 2019-20. In addition Direct Transfer of Rs. 6000/- per
year to farmers is another incentive which guarantees some monies going in the
pocket of farmers. PM Maan Dhan Pension Scheme has also been introduced4.
The emphasis is on addressing the problems of risks adversely
affecting farmers’ income and to work on more comprehensive, integrated and
holistic approach towards fulfilling the target of doubling the farmers’ income
within the time frame. The efforts are certainly based on good knowledge,
extensive research and use of technology yet the desired outcomes could not be
achieved.
(4) INCREASE
INVESTMENT IN AND FOR AGRICULTURE:
As per a report of the Committee on Doubling
Farmers’ Income (DFI) said an additional investment of Rs 6,39,900 crore is
required from both public and private sectors to enable doubling
of farmers' real income by 2022-23, on
2004-2005 prices5.
To boost
farmers’ real income the committee said an additional Rs. 617 billion private
investment is required. The committee strongly recommended the stepping up of
institutional credit on a large scale as only 50 to 60 percent of the
requirement is being fulfilled through institutional credit. In back States the
investment requirement will be still more.
During last few
years we have witnessed higher budgetary allocations e.g. the total budgetary
allocation of the Ministry of Agriculture and Farmers which was Rs. 25460 crore
in the year 2015-16 gone up to Rs. 58080 crore in the year 2018-19. But still
it is not sufficient in relation to the projections made by the Committee on
DFI.
The public
investment for agriculture also needs to be stepped up but looking at the
fiscal situation and shrinking collection of GST we may only hope that these
dreams will be fulfilled in coming next few years.
(5)
LINKING VARIOUS ACTIVITIES:
Inter-Ministerial Committee to examine issues
relating to Doubling of Farmers’ Income (DFI) has identified the below
mentioned seven sources of income to double farmers' income by 2022. A holistic approach for linking of development
activities in sectors such as water resources, soil health, food processing,
rural development, power, information technology, environment, fertilisers, and
other sectors to agricultural development is needed to achieve the goal of DFI
but we do not witness any such sign except a few scattered efforts here and
there.
(6) POST
HARVEST INFRASTRUCTURE AND VALUE ADDITION:
Report of the
Committee on DFI expands the post-production value capture activities by going beyond
‘marketing’ and advocating ‘monetisation’.3 On the lines of the
well-known ‘marketing efficiency’, the Committee adopts ‘monetisation
efficiency’ as the right measure of value capture. Agricultural production is
not the sole output from the rural economy. Agriculture in turn, sets off other
near-farm and non-farm economic activities in the rural landscape. Agro-food
processing industries have the potential to generate significant employment in
production activities and also indirect employment through its forward and backward
linkages. These industries would help in reducing post harvest losses and wastes
as well as in using by-products more efficiently. This in turn will increase
rural income.
The overall well-being
of the rural population therefore depends on agriculture as a primary sector,
and various associated secondary and tertiary sector activities that either
support agriculture or are supported by agriculture.
As part of the DFI strategy, the farming household
should be empowered, not only to capture the maximum value from all that is
produced off the farms, but also from other near-farm economic activities. The
secondary sources of income help mitigate some of the risks associated with
agriculture and allows for shared income sources in a household.
(7) EXTENSION AND KNOWLEDGE DIFFUSION:
Past
strategy for development of agricultural sector in India has primarily focused
only on raising agricultural output and raising farm productivity. The strategy proved successful as it led to
Green Revolution and not only made India a self sufficient at aggregate level
but also a net food exporter country. The new strategy focuses on farmer’s
welfare by using various measures to achieve the targeted income including
agricultural extension services.
Agricultural
extension has been understood as an important techno-social enabler that
supports farmers in their endeavours to produce more. If extension is to serve
the purpose of effecting a paradigm shift in agriculture from
production-centricity to income centricity it deserves to be redefined6.
Accordingly,
the DFI Committee redefines Agricultural Extension as follows:
“A
system of empowering farmers with information, knowledge, technology, skills,
risk and farm management practices, across agricultural sub-sectors and along
all aspects of the agricultural supply chain, so as to enable the farmers to
realise higher net income from their enterprise on a sustainable basis”
The new definition covers not only the
cropping systems, but also other sub-systems including horticulture, animal
husbandry, fisheries, etc. emphasising thereby the importance of
diversification, demand centric innovations and farming system approach.
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 (Chand, Ramesh 2017). This calls
for a multipronged action of all above strategies and plans in a time bound
action plan. The above set of activities
initiated by the government, symbolise the diligence and commitment to double
the farmers income in a time bound manner. A major impediment to the success of
these strategies is small farm sizes. A unique ‘Small Farmers, Large Field’ (SFLF)
model has been first successfully experimented in Vietnam. In this model
farmers physically pool their land and set up companies that operate like
private businesses. This experiment has
been successfully tested in Odisha informally which shows the way forward for
achieving economies of scale and reducing cost of cultivation inturn, resulting
in rise in income of farmers. NITI Aayog member Ramesh Chand, in a 2017 policy
paper, advocated collective action for minimising the scale disadvantages faced
by small and marginal farmers. The Farmer Producer Organisation/ Company
approach is one way to enable them to improve their bargaining power, by
pooling resources and linking them to the market.
The strategies
proposed for doubling farmers’ income include planting better seed
varieties/hybrids, improved production practices, diversification towards
high-value crops, development of infrastructure and market linkages, and
providing access to institutional credit. Thus, government initiatives and
intensions are clear and are visible in the schemes launched and multipronged efforts
made during past few years but sustained and incremental efforts will be needed
to achieve the goal.
REFERENCES
1. Gulati
Ashok and Sweta Saini (2016), From Plate to Plough, raising Farmers’ Income by
2022, March 28.
2. Mishra,
Promod K. (2019) Driving Indian Agriculture towards Farmers’ Welfare: Current
Policy Perspectives, Inaugural address delivered at the 78th Annual
Conference of ther ISAE, at Institute of Economic Growth New Delhi, Ind. Jn. of
Agri. Econ. Vol 74, No. 1 , Jan-March2019
3. Economic
Survey, GOI , 2019
4. Doubling
Farmers’ Income – Volume XIV Comprehensive Policy Recommendations, Department
of Agriculture, Cooperation and Farmers’ Welfare, Ministry of Agriculture &
Farmers’ Welfare. Sept. 2018.
5. PM
Kisan Maan Dhan Yojana, http://vikaspedia.in/agriculture/agri-insurance/pm-kisan-maan-dhan-yojana
6. Economic
Times, The committee on Doubling Farmers’ Income, 14th August 2017
7. Doubling
Farmers’ Income – Volume XIV , p. 155
8. Chand, Ramesh (2017) Doubling Farmers’ Income:
Rational, Strategy, Prospects and Action Plan, Niti Aayog, GOI, New Delhi.
9. Samarendu
Mohanty & Sampriti Baruah,2018 Agricultural economics: How doubling of
farmers’ income is possible even with small landholdings, Indian Express,
1 Nov.
