Doubling farmers' income: A long haul

Will political parties draw right inferences from the farmers' protests to re-channelise their focus on to agriculture?

The legislative processes of repealing the farm laws of 2020 were completed with the President’s assent on November 30. The farm laws were envisioned to increase the farmers’ net income by providing extended market facilities in addition to traditional APMCs with an idea of “higher real remunerative returns on the farmers’ produce”. The farmers are still protesting, demanding a legal guarantee for minimum support price (MSP) and providing jobs to family members of those who lost their lives during the protest. On the other hand, the government has stated that there is no data on the number of farmers who died during the protests. According to informal estimates, more than 700 farmers died during the protests. The government should initiate a dialogue with the farmer associations/unions to identify the dead.

The three farm laws that were enacted in 2020 and subsequently stayed by the Supreme Court in January, need to be seen from the perspective of agricultural marketing reforms and the government’s goal of doubling farmers’ income (hereafter DFI) by 2022-23. The repeal of farm laws has implications on the goal of DFI. Set in this context, it is essential to explore and analyse the nuances of DFI and a way forward to achieving the intended objectives.

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The latest National Sample Survey of “Situational Assessment of Agricultural Households and Land and Livestock Holdings of Households in Rural India, 2019 (SAS, 2019)” findings are significant for the reasons of (i) ongoing farmer’s protests (ii) goal of DFI. The survey findings are useful for a comparative picture of the agrarian variables with that of the situation in 2013 (SAS, 2013). The comparison is critical for assessing the functioning of policies in agriculture with the government’s aim of DFI by 2022-23. Some of the major findings are worth considering in the context of DFI.

In 2012-13, the average monthly income of an agricultural household was Rs 6,426. Out of this, only 59.82% of income comes from the cultivation and farming of animals. To be precise, Rs 3,081 (47.95%) is the net income from cultivation. From this, it is clear that farm income is less than non-farm income, including wages/salary and business. The average monthly consumption expenditure in 2012-13 was Rs 6,223. In this context, Prime Minister Narendra Modi set up the target of DFI for 2022-23 in 2016. The DFI committee calculated the average annual income for the year 2015-16 as Rs 96,703 using the extrapolation method. The committee stated that in order to achieve the target, farmers’ income should grow at 10.4% at constant base prices.

Given this backdrop, SAS 2019 reveals certain critical insights about the changes in farmers’ income during 2018-19. In SAS 2019, farmers’ income was computed using two approaches, namely (i) paid-out expenses (ii) paid-out + imputed expenditure. The total income using the paid-out expenditure approach stands at Rs 10,218 against the Rs 8,337 in the latter approach. By taking the paid-out expense approach, the farmers’ income was Rs 10,218 in 2018-19 against Rs 6,426 in 2012-13. Does this mean the farmers income has grown by Rs 3,792 in the span of six years? To answer this question, we need to break down the data into separate heads as done in SAS 2013 and 2019.

Out of Rs 10, 218, the net receipt from crop production is Rs 3,798, constituting only 37.2%. Major income has come from wages and salary with Rs 4,063 (40.8%). On the whole, farm income has declined from 47.95% to 37.2% and non-farm income has increased to 62.8% from 59.82%. The net income from farming is Rs 3,071 and Rs 3,798 during 2012-13 and 2018-19 respectively. This would mean that the net farmer’s income has increased by Rs 727 in the span of six years with an average of Rs 122 per year.

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The rising cost of agriculture and production and the withdrawal of the state in addressing the structural impediments are one of the main determining factors of agricultural development in the country. The marginal increment in the net farmer’s income exclusively from crop production corroborates this point in a substantial manner. The SAS, 2019 has shown the plight of farmers with the help of variables such as fragmentation of land, average monthly net income, land leasing, indebtedness, institutional credit and the viability of farming. Among these, except institutional credit, all other indicators show discouraging pattern as seen from the agrarian policy perspective.

Neo-liberal policies

The agrarian crisis has deepened since the adoption of neo-liberal governance policies and development model. The changing role of the state in the neoliberal era from regulator to facilitator of governance has widened the unequal access of land and the appropriation of land. Even the modest socialist agenda of land reforms has taken a back seat perpetuating the existing socio-economic inequalities among the farming community enforcing large migration from rural to nearby towns and urban areas, especially the marginal, small and medium farmers.

The Union and state governments need to work together in addressing the problems of agriculture that are rooted in policies, institutions, market structures rather than only pursuing the vote bank politics through populist schemes. In the context of the political economy of agrarian crisis and rural distress, it is pertinent to ask whether the political parties draw right inferences from the farmer’s protests to re-channelise their focus on to agriculture. The government’s objective of DFI can become a reality only if it sincerely makes attempts to address some of the above-mentioned structural and institutional issues. The vision of DFI can be achieved only by pushing land reforms, instituting credit policies by the state governments and altering the price mechanisms by linking them with general price index as promised by the BJP in 1998 election manifesto.

(The writer is PhD Fellow, Centre for Political Institutions, Institute for Social and Economic Change, Bengaluru)