Doubling Farm Income: Important Pillars: (1) Increase Productivity

 

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 75^th 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.