Agriculture Policy Briefing

Postpone Target for Doubling Farmers’ Income by Seven Years In View of “Mediocre” Agri-GDP Growth, Two Economists Say

The target date for achieving the doubling of farmers’ income should be shifted by seven years from 2022-23 to 2029-30 given the poor rate of agricultural GDP in the past five years, say Ashok Gulati and Ranjana Roy in the Indian Express.

Comparing agri-GDP growth rates achieved under various governments since 1991-92, they say the performance under Prime Minister Narendra Modi has been “mediocre”: at 2.9 percent average growth rate over the past five years, it is better than the record of Prime Minister Narasimha Rao (2.4 percent), the same as that of Prime Minister Atal Behari Vajpayee (2.9 percent), a tad lower than that of Prime Minister Manmohan Singh during his first term in office (3.1 percent) but significantly lower than the 4.3 percent growth rate achieved during his second term.

The authors note that the growth rates in inflation-adjusted (real) incomes of agri-households converge with growth rates of agri-GDP over the long term. The compounded annual growth rate of agri-GDP between 2002-03 and 2015-16 was 3.8 percent while that of agri-household incomes was 3.7 percent.

The Nabard Survey on Financial Inclusion published last year, showed that the average incomes of agri-households in 2015-16 was the highest in Punjab at Rs 23,133 while in Uttar Pradesh it was Rs 6,668, the lowest.  The all-India average was Rs 8,831 month. Mind you, this is the income of households, not of individuals.

“A government servant or a private employee, they are unnati sheel (well-off) and live well. But a farmer with even 10 acres cannot live as well.” Ghisilal Verma, 50, a farmer of Panchpipaliya village, in Madhya Pradesh’s Sehore taluk

Ghisilal Verma

and district summed up plight of farmers in general. “I am getting the same rate as I was in 2013-14,” he added.

Farmers are experiencing deflation. According to the Central Statistical Office (CSO), while agricultural output grew by 2.7 percent in October-December 2018, its value rose at a lower rate – by 2.4 percent. This is the lowest since October-December 2004 when growth rate of Gross Value Added (GVA) of agricultural output fell by 1.1 percent.

The Indian Express in an editorial says this is episodic, the result of general economic slowdown and stagnant incomes. Yet, it says a fundamental recast of agricultural policy is needed because farmers are now able to quickly respond to prices and help the country tide over shortages. So policy meant to address endemic scarcity should change to allowing greater play to market forces. Stock holding limits and export restrictions must be lifted because farmers suffer when produce prices are low.

Gulati and Roy say agri-GDP will have to grow annually at 15 percent to achieve the target of doubling farmers income by 2022-23. This is impossible, they say.

(Top photo: A group of chickpea farmers at Kotapadu village in Kolimigundla taluk of AP’s Kurnool district. Photo by Vivian Fernandes)

 

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