Enhance farm income to tackle agrarian distress

OVER the past 25 years or so, virtually every Finance Minister has begun his or her Budget presentation by emphasising the significant role of agriculture in the Indian economy. From ‘Kisan ki Azaadi’ to ‘a lifeline of the country’s economy’, several epithets have been used to highlight the focus of the Budget proposals. Arun Jaitley had talked of enhancing farm income and kept it at the top of the government’s five priorities. Nirmala Sitharaman has also accorded due recognition to agriculture by giving it pride of place among the nine priorities she has spelt out.
The boost for agriculture in almost every Budget should have transformed the rural economy by now. But despite the focus, not even once did it look as if agriculture was on the path to recovery. This is because while the underlying emphasis has remained on increasing crop productivity — in the hope that it would get higher prices and income for farmers — the agrarian distress has only grown. If the average monthly income for an agricultural household has remained around Rs 10,218 even after a successful Green Revolution and despite all the budgetary support, the serious crisis on the farm cannot be denied.
Here is a reality check: in Karnataka, according to an official estimate, as many as 1,182 farmers have died by suicide in the past 15 months. In Maharashtra, 1,267 farmers took their lives between January and June this year, with Vidarbha’s Amravati division alone witnessing 557 cases.
Farmer suicides are not a new phenomenon. A compilation of data by the National Crime Records Bureau shows a staggering number of farmer suicides in the past 27 years. This period coincided with the 25 years of heightened budgetary commitments for agriculture. Between 1995 and 2014, 2,96,438 growers had taken the extreme step. The period from 2014 to 2022 saw 1,00,474 farmer suicides. Simply put, close to four lakh farmers ended their lives between 1995 and 2022, and that too at a time when annual Budgets kept promising to turn agriculture around. The mismatch between the budgetary allocations and the continuing agrarian crisis is glaring.
Telangana is now in the second stage of providing a farm loan waiver. It is in the process of striking off
Rs 6,198 crore of outstanding loans for 6.4 lakh farmers, with each of the indebted growers getting a waiver of Rs 1.5 lakh. In the first phase, 11.34 lakh tillers had received Rs 6,190 crore in their bank accounts. In the third phase, set to begin this month, 17.75 lakh cultivators will receive a waiver for Rs 12,224 crore. In all, 35.5 lakh farmers in the state are being given a debt waiver. It, however, does not mean that rising farm debt is not a concern in other states.
The latest global analysis by the Organisation for Economic Cooperation and Development (OECD) shows that among the 54 major economies it has worked out the producer subsidy support for, only in India’s case are farmers bereft of adequate budgetary support to cover up the losses. The report states that Indian farmers have continued to incur losses year after year since 2000. Would any other sector of the economy have survived the continuing losses?
While we can find fault with the methodology, the fact remains that no amount of support for technology or the injection of money into other schemes to increase productivity and production will see farmers’ income go up. It hasn’t happened anywhere. The OECD study is a testimony to this.
This is what I call the ‘via Bathinda’ approach. Why can’t a direct effort be made to raise farm incomes rather than routing it through the input suppliers or technology providers? It hasn’t worked in the past, and it will not work in the future either. Several studies have shown how the input suppliers rake in profits while the farmers remain at the bottom of the pyramid. Even in the case of supply chains, the growers’ share in the ultimate profits is hardly 5-10 per cent or even less. A recent study in the UK said that while the retail profits from marketing strawberries and raspberries went up by 27 pence in 2021, the farmers’ share was only 3.5 pence. Earlier, some studies had shown that for the six daily necessities that consumers depend upon, farmers get only 1 per cent of the retail profit. Therefore, the thrust on strengthening supply chains, as stated in the latest Budget, will only be helpful if the share of the primary producer is guaranteed.
With an allocation of only 3.15 per cent of the total Budget for agriculture, and that too for roughly half of the country’s population engaged in the sector, nothing extraordinary can be expected. An outlay of
Rs 1.52 lakh crore this year, a jump of about Rs 26,000 crore from the previous year, essentially covers the non-plan expenditure, as it was earlier referred to. Given that the budget for agriculture also includes an outlay of Rs 60,000 crore for the PM KISAN scheme, which provides a monthly entitlement of Rs 500 to every land-owning farmer, what is left is
Rs 92,000 crore for agriculture. No wonder the Household Consumption Expenditure 2022-23 tells us that the median monthly per capita consumption expenditure in rural areas stands at a mere Rs 3,268. If agriculture is not viable, rural spending will remain low.
Hence, agriculture needs a serious rethink. There is a critical need to first address the issue of livelihood so as to bring about income parity with other sections of society. My suggestion is to set up a National Commission for Farmers’ Income and Welfare, which should come up with specific ways to enhance farm income in a given time frame. Start by ensuring a legal framework for the MSP (minimum support price).

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