Doubling Farm Income By 2022: A Tall Order?
Prime Minister Narendra Modi has promised to double farmers’ income by 2022. With a year to go before the general elections, BW Businessworld brings together an eminent panel of experts for a roundtable discussion on the feasibility of such a promise. The panellists are R.G. Agarwal, Chairman, Dhanuka Agritech; Siraj Hussain, former secretary, Ministry of Agriculture; Abhijit Sen, former member, Planning Commission of India; Neeraja Adidam, Joint Secretary in the Ministry of Agriculture; and Nilabja Ghosh, Professor, Institute of Economic Growth.
One of narendra modi government’s priorities has been to address farmers’ issues and create opportunities for them to earn more. On 4 July, the government hiked the minimum support price (MSP) for paddy by Rs 200 as part of its goal of doubling famers’ income by 2022. The steps taken to achieve Modi’s vision is a subject of much debate among economists, agricultural communities and, of course, the media. BW Businessworld recently held a round table discussion on the practicality of the promise to double rural income by 2022.
Edited excerpts:
Is the goal of doubling farmers’ income practical?
Siraj Hussain: It was a good announcement made by the PM. Initially, there was no clarity on whether the government planned to double the real income or nominal income of farmers. Nominal income, in any case, doubles in about 6-7 years. The moot question is whether the real income of farmers can be doubled. If we take the NSSO data for 2013, the average farmer’s household income is about Rs 78,000 per year. If we use the prices of 2015-16, it becomes Rs 97,000.
So, the question to ask is if their income can be doubled to Rs 1.94 lakh by 2022. Two years have already gone by and we didn’t see a very high level of agricultural GDP growth. Can we achieve 12.3 per cent growth from now up to 2023? To me, it seems very unlikely as it hasn’t been achieved anywhere in India or the world. So, it is a good objective but extremely unlikely to be achieved.
R.G. AGARWAL: No, it is 100 per cent possible. Doubling farmers’ income may take 1-2 years. If the farmers are trained, they should not sell their produce at Rs 5 per kg. They can store it and the government can finance them. When industrialists borrow, they invest the money in their business and multiply it. But unfortunately, despite the government extending loans worth Rs 1,100 crore to farmers, their position is not improving because they are not investing the money in agriculture. They spend the money on weddings, building homes and buying cars.
Abhijit Sen: In the next two years, it will be impossible. And in terms of the direction in which Mr Agarwal is speaking, they all are correct. But I don’t think I see anything that is a distinctive break from the past. Unfortunately, several things that have happened — not necessarily because of the central government — make me think that things are not only worse than they used to be in terms of policy on the ground but also the direction is going to remain that way. I will tell you one main reason for that: the 14th Finance Commission, of which I was a member, gave a large amount of money to the states. Now, the central government has cut back on its expenditure and expects the states to take care of their expenditures.
Other states did spend more, but once you break down that spending you will know that a very large part of it are on things like loan waivers, which is not going to add to the future income. It is palliative today but not going to add to future incomes and, given that, I think it is always desirable to set your aim high. But it is even more desirable to actually make it happen.
Is the government planning to make transformative changes?
NeerAja Adidam: Yes. As part of the government, we are responsible for policy implementation on the ground. We believe that we can increase the incomes of farmers by 2022. The government has already taken initiatives. If you want to increase the income of farmers, there are 2-3 areas you need to look into. One is to decrease the input cost; then take up productivity enhancement measures; and then, the MSPs. They said there has been an increase in the awareness and there would be 8-10 per cent increase in production and reduction in cost wherever farmers have adopted soil health cards. Yes, there is not much to do in that direction but it is the initial step. The second initiative is organic farming.
Is it really practical to think about MSPs nowadays? Have they lost their relevance?
Nilabja Ghosh: Actually, whatever I have seen in Niti Aayog’s calculations, I think I would agree with Prof. Sen. But again there is no harm in considering doubling farmers’ income. Perhaps it could take some more time. But I have some more questions. Are nominal funds real?
Are we talking about only agricultural income or income from other associative activities in farming? We have to create employment in agro processing; and some amount of processing can be done in the rural areas. Some amount of input supplies can be created, then it opens up huge opportunities.
So, what does it mean for doubling income there? We have to look at the whole distribution. And I agree that right initiatives have been taken, but maybe we should find more direction in the economic policies.
Mr Hussain, I was going through the data of farm bureau of the US. A marginal farmer earned about 35 cents on every dollar 30 years ago and now he is earning about 13 cents on $1. So it is going down everywhere and they (US) are the biggest exporters...
HUSSAIN: Actually, if you see this year’s FAO data you will find that farm prices have remained detangled. And that is a global problem in the agriculture sector. The stress is also felt in developed countries like the US. However, coming back to income from sources other than cropping, one very important decision of the government, which has harmed the cause of the farmer income, is the restrictions imposed by the Ministry of Environment and Forest in 2017 on trading of animals. Prof. Sen would know and that will be proved when the data for farmers will be released by NSSO. You will find that income from milk has already gone down. Milk prices used to rise every summer, but now prices have been reduced even by Amul. Trading in animals has gone down. Will it have an impact on farmers’ income? We will see when the data is released. Doubling of farmers’ income in my view is not going to happen by 2022-23. However, it is good to aim for that. Also, it will be very difficult to double the income of Punjab as it will be very high.
Do you really think that whatever Punjab has faced is all because of the agro- chemical industry?
Agarwal: It is a misconception. The only Nobel prize winner in agriculture Norman Borlaug had said, “We are 6.6 billion people now. We can only feed 4 billion. I don’t see 2 billion volunteers disappearing.” It is a big question and we have to decide: are we going to leave the 2.6 billion people to die? First job is to feed them.
As for fertiliser use, developed countries use twice as much or even more fertilisers than we do. I don’t mean that we should blindly use pesticides or fertilisers. I fully agree that fertiliser use should be based on soil health card. Similarly for pesticides, they are to be used judiciously as per need.
Is doubling farmers’ income impractical then? Mahatma Gandhi’s once said, ‘They (industrialists) are the trustees of poor in India’. Can you, as an industrialist, come up with an idea where the government has to invest with private support, like in cold chains?
Agarwal: Yes, the government should come up with something like that. What Mr Hussain said is right, their budget is not enough. But already, budgetary allocation on agriculture has been doubled by this government. You can’t expect the entire budget to be devoted to agriculture. Agriculture should be taken up as an entrepreneurial venture.
Still, a lot has to be done about farmer’s education. Milk has changed the lives of farmers; it is one of the sources of income. He can survive if he has one or two milch animal. So we have to see not in isolation; we have to see the positivity in what is happening; where is the potential and where ever we are lacking. I have my reservations on organic food. The common man cannot afford it. We have to think for everybody.
Is it like three farmers selling their produce for Rs 200 rather than many farmers selling the same produce for Rs 2? So, isn’t it the same with organic produce too? The premium value exists as a result of diversification.
Sen: There are too many things coming at the same time. As far as organic farming is concerned, I think if people are convinced that it is pesticide-free and purely organic, they would be willing to pay a higher price. But if that breaks down, then nobody will be willing to pay a higher price.
As for the issue about getting people more incomes by the same outputs being shown by fewer people, the best way of doing that is really to process it and take some of the values for those who are in the primary state into the processing state.
Does it seem like an excuse when the central government says that agriculture is always a state subject?
Adidam: No, not at all, it is not an excuse. Micro-planning or planning at the grassroots level is much more important, and thinking that good ideas always come from the Centre is not something that the central government envisages. I can say this for the agricultural department at least.
As you may know, the Rashtriya Krishi Vikas Yojana is a scheme that actually develops the ideas at the state level. The state has to come up with innovative ideas and plug the gaps on their own in agricultural development.
So, whatever schemes the Centre launches, they leave it to the state to come up with their own innovations. Even for the new ideas coming up for various schemes, we give only policy guidelines. That’s the kind of liberty we give to the state. So, we never take that as an excuse, that everything has to be done by the state. For example, we have already completed 585 eNAM markets. Then, there are rural haat’s.
But there are thousands still left to take the eNAM route?
Adidam: Yes, but by 2020-22 we would include those thousands. More than one crore farmers are there. See, when a new initiative is started there are some negatives things that crop up. But now we have done substantial amount of trade through eNAM. The other thing is about developing eastern India. We have programmes for that also, for bringing green revolution to east India, to increase the productivity of that region and the diversification part.
The agriculture department cannot do all the things. So, we have MSME, MOFPI and many of these ministries where they have expertise. So there are conversions required from different ministries to achieve goals like value addition, marketing, entrepreneur development, and we are looking into them.
On the organic food front, I would like to clarify that we should never be compromising on food security. But there are certain areas like some hilly areas or some dry-land areas where traditionally the fertilisers have not been reaching. We are also targeting those areas. And sitting on that seat I know it because I look at organic farming. I was not a believer earlier, but now I see a lot of enthusiasm among all quarters. Our honourable Prime Minister, too, talks about organic revolution. Farmers are in favour of organics because of the premium price they are getting at some places. Consumers are also looking at it as they want quality. Since we are talking about increasing the farmer’s income, this could be one of the ways.
Ghosh: The concept of farmer’s income is not just about some income from the crops. Of course, there are other sources of income. But this is something good that we were expecting for a long time, that this course has shifted from higher production to the rights of the farmers so that they can lead a good life. It doesn’t only depend upon the income that comes from the crops, it depends on the access to health, education, electricity, cooking gas for women farmers, and then this marketing is there.
Of course, there are several constraints faced by the National Agricultural Market and one among them is quality checking. We can create more employment out of this by making some regulatory bodies. These do not have to be only government bodies; these can also be organisations that can be trustworthy. We are going for online trading, so there is a big scope there to create a supply chain. But somewhere I find the direction of the economic policy not very clear to us and it may be so to the states and to the farmers as well.
There are a lot of things to do. We discussed that MSP has a very good intention as it seeks to ensure that farmers get at least 50 per cent of the input cost as surplus. But will the MSP alone do it? That’s a big question.
We need micro-irrigation, so that water reaches when and where it is needed, and so do fertilisers. Another good thing is that they have done this direct benefit transfer. There are several issues with the way it works. We have to think of the farmers who are not producing a huge surplus, we have to think of the eastern region where procurement is not so common. So how are we going to do it? This deficiency payment, will it work there? And when we think about exports, we have to focus on promoting our products. Organic farming is not the tool for food security, but, of course, we can reduce chemicals.
