Doubling farmer’s income: Ease doing of agri-business
The previous few successive Union budgets have referred to PM Modi’s dream of doubling farmer incomes (DFI) because the precept guiding the federal government’s agricultural insurance policies. It’s each encouraging and heartening to know that this authorities continues to be steadfast on the dream, and is discovering methods to realize it. We take inventory of the state of affairs.
The PM first introduced the purpose of DFI at a farmer’s rally in Bareilly, Uttar Pradesh in February 2016. He shared that he wished to realize this purpose by FY23. The 12 months was chosen because it marks the 75th 12 months of India’s independence, and this might be a super present for the farming group on the event. Between FY16 and FY23, the PM had seven years to realize this dream.
Two factors are noteworthy on this regard: (i) DFI is promised to be in actual phrases, i.e., after adjusting for inflation, actual farmer incomes are geared to double; and (ii) that is focused solely at landowners or cultivators, and never agricultural labourers (who don’t personal land, however function on land owned by others for wages paid in money or form). As per Census 2011, India’s agricultural workforce was about 263 million, of which 144 million (55%) are agricultural labourers, and solely 119 million are cultivators.
Apparently, when the DFI dream was introduced, the nation didn’t have an estimate of the extent of farmer incomes. So, the PM arrange an knowledgeable committee to judge the precise and goal degree of farmers’ incomes, and determine methods to reaching the latter. The Committee, below the chairmanship of Dr Ashok Dalwai, submitted its ultimate report in September 2018. It estimated farmers’ common month-to-month earnings in FY16 to be Rs 8,059. Upon doubling, this earnings ought to ideally rise to Rs 16,117. To attain this purpose in seven years, the committee estimated that farmer incomes would want to develop at a median annual actual development price of 10.4%.
About the identical time, in August 2018, the outcomes of NABARD’s All India Rural Monetary Inclusion Survey (NAFIS) for FY17 had been launched, which introduced one other estimate of farmers’ incomes. As per this survey, in FY16, the common Indian farmer earned about Rs 8,931. However the 2 estimates, the expansion price required for DFI was nonetheless pegged at CAGR 10.4%, with variations between states and union territories.
Traditionally, at an all-India degree, the expansion price of farmers’ incomes has intently adopted that of the nation’s agricultural and allied sector’s (GVA A&A). Utilizing the latter as a proxy for farmer earnings development, we see that since FY16, GVA A&A grew at a median price of about 4% (see graphic).
If the required development price to understand the purpose of DFI is a median 10.4% every year, the precise efficiency, to this point, has fallen in need of goal by a major margin.
If the federal government nonetheless needs to realize the goal of DFI, farmer incomes within the remaining three years (FY21, FY22, and FY23) should develop at a CAGR of 18-19%, relying on the ultimate estimate of GVA A&A development price for FY20. Contemplating an inflation price of about 5%, the required development price in nominal phrases, can be 23-24%! The sort of agri-growth price has by no means been achieved traditionally at an all-India degree, at the least within the current previous. Nonetheless, states like Gujarat, Madya Pradesh, Chhattisgarh, and Rajasthan, amongst others, have delivered such development in choose years not too long ago.
Such double-digit development is unlikely to return from the agriculture sector alone, and except the federal government focuses on allied sectors and non-farm sectors, the dream of DFI is not going to be realised. The federal government appears to recognise this reality, too (bit.ly/2OTQ5wf).
Subsequently, simultaneous deal with all sources of farm incomes is required. As per NAFIS, there are 4 sources of farmer incomes: In FY16, about 50% of farmers’ incomes got here from “wages and salaries”, 35% from crop cultivation, 8% from livestock actions, and seven% from non-farm actions. Inside the wages and salaries’ part, wages alone comprise about 34% of farmers’ incomes. These come largely from working below schemes like MGNREGA, and by engaged on others’ farms. By decreasing budgetary allocation to MGNREGA (from about Rs 71,000 cr as per FY20 RE to `61,500 cr in FY21), the federal government might have capped farmers’ incomes from this supply. Rural wages within the agricultural sector, too, have been low, and falling in recent times (see graphic).
This places the burden of doubling farmers’ incomes on the opposite three sources. With the general financial slowdown, earnings sources from non-farm actions—already a small part of farmer incomes—will not be very prone to be efficient on this regard. The federal government should, therefore, deal with crop cultivation and livestock actions, together with fisheries, poultry, cattle, and beekeeping, amongst others, if DFI is to be achieved.
The Dalwai committee’s studies give an exhaustive record of what must be accomplished, so one can keep away from reiteration. What I do want to spotlight is a studying drawn from the not too long ago launched Samrudhi—Odisha’s Agricultural Coverage 2020.
Between FY03 and FY16, Odisha farmers’ incomes grew quickest within the nation. The 2020 coverage builds on that momentum, and advocates progressive reforms undertaken concurrently in all elements of agriculture and allied actions. This, I consider, could also be replicated nationally. The necessity is for states to reform systematically and sequentially.
The time is opportune for GoI to make use of its proposed Ease Of Doing Agri-Enterprise Index (EoDABI). As agriculture is a state topic, a mechanism could be carried out that ranks states on an index that tracks their efficiency on a required set of reforms, with allocation of further funds as reward to greatest performers, to nudge states to reform and assist GoI chase the DFI dream on mission-mode. The EoDABI was proposed in 2019 by the agriculture ministry on the Centre. It goals to trace states’ efficiency on six parameters: (i) agri-marketing reforms; (ii) reforms for decreasing prices of inputs; (iii) governance and land reforms; (iv) danger mitigation actions; (v) rising manufacturing and productiveness; and (vi) investments in/for agriculture.
It’s helpful for all the nation that PM Modi realises his dream, and we solely want him greatest.
The author is Senior Guide, ICRIER. Views are private