1) Not the MSP route

GS3: Indian Agriculture related


  • The authors talk about doubling farmer’s income.

Editorial Insights:

What’s the matter?

  • We have completed 5 years for the Indian PM announcement of achieving an ambitious target of doubling farmer’s incomes by 2022-23.
    • To achieve the target of doubling farmer’s income in real terms, the Ashok Dalwai committee has chalked out a strategy.
      • To achieve this, a growth rate of 10.4% per annum is required.

The farmer income & growth numbers during this period:

  • We don’t have the latest data on farmer’s income.
    • 2015-16, NABARD data shows that the farmer’s income is Rs. 8931 in 2015-16.
  • However, we do have the recently released 2018-19 Sisutaion Assessment Data of agriculture households by NSO.
    • It shows that average agricultural households earned a monthly income of Rs 10,218 in 2018-19 in nominal terms,
      • Which is a 8% CAGR when compared to the 2012-13 period.
    •  At the same time, based on these nominal numbers, the projected real income growth rate is around 3-4%.
  • Further, the Average Annual Growth Rates data too reaffirms that the agri-GDP for the period of 2002-03 to 2018-19 is 3.3%.
    • However, at the state level, the variation is much more as state-GDP growth is volatile & heavily depends on the monsoon.
    • There is a huge gap between agri-GDP & farmer’s income growth in many states.

The underlining points from the above-disaggregated numbers:

  • The share of income from rearing animals has gone dramatically from 4.3% to 15.7%.
  • The share of the income from the cultivation of crops has decreased from 45.5% to 37.7%.
  • The share of wages & salaries has gone up from 38.7% to 40.3%.
  • The share of income coming from non-farm business has come down from 11.2% to 6.4%.

The concluding message from the authors:

In the coming days, the scope for augmenting farmers’ incomes is going to be more & from animal husbandry. The policy that believes that the MSP system will be the way for doubling farmers’ income is going to be failed. The best way to invest is to incentivize the private sector to build efficient value chains based on a cluster approach.


Based on the recommendations of the Ashok Dalwai committee, The Prime Minister has announced the government’s goal of doubling the farmer’s income by 2022.

Rationale behind this:

  • Agriculture supports the sustenance of more than half of India’s total population. Doubling farmers’ incomes in such a short period is an overwhelming task for decision-makers, scientists, and political makers due to their continuous role in employment, income, and, above all, in national food safety.
  • Doubling the farmers’ income is possible through the increase in total production and the best realization of market prices, reducing production costs, product diversification, post-harvest efficient management, etc.

Why Doubling Farmers Income?

  • Past strategy for the development of the agriculture sector in India has focused primarily on raising agricultural output and improving food security.
    • The net result has been a 45% increase in per person food production, which has made India not only food self-sufficient at the aggregate level, but also a net food exporting country.
  • The strategy did not explicitly recognize the need to raise farmers’ income and did not mention any direct measure to promote farmer’s welfare.
    • The net result has been that farmer’s income remained low, which is evident from the incidence of poverty among farm households.
  • Low level of absolute income, as well as large and deteriorating disparity between income of a farmer and non-agricultural worker, constitute an important reason for the emergence of agrarian distress in the country during the 1990s, which turned quite serious in some years.
  • The country also witnessed a sharp increase in the number of farmers suicides during 1995 to 2004 – losses from farming, shocks in farm income, and low farm income are identified as the important factors for this.
    • The low and highly fluctuating farm income is causing a detrimental effect on the interest in farming and farm investments and is also forcing more and more cultivators, particularly younger age groups, to leave farming. This can cause a serious adverse effect on the future of agriculture in the country.
  • It is apparent that income earned by a farmer from agriculture is crucial to address agrarian distress and promote farmer’s welfare.
  • In this background, the goal set to double farmers’ income by 2022-23 is central to promote farmer’s welfare, reduce agrarian distress and bring parity between the income of farmers and those working in non-agricultural professions.

The Roadmap to achieve the Doubling Income:

Doubling real income of farmers till 2022-23 over the base year of 2015-16 requires annual growth of 10.41% in farmers’ income. This implies that the ongoing and previously achieved rate of growth in farm income has to be sharply accelerated. Therefore, strong measures will be needed to harness all possible sources of growth in farmers’ income within as well as outside the agriculture sector.

  • Area-agricultural output has to be increased through access to irrigation and technological advancement.
  • Resource use efficiency or saving in cost of production.
  • Increase in cropping intensity by raising short duration crops after the main Kharif and after the main rabi season so that agricultural land does not remain unused for half of the productive period.
  • Diversification towards high-value crops like fruits & vegetables & other allied enterprises like forestry, dairying rather than depending primarily on crop cultivation.
  • Shifting cultivators from farm to non-farm occupations – Non-farm sectors provide 2-3 times more productive employment than the agriculture sector in rural areas
  • Improvement in terms of trade for farmers or real prices received by farmers- Use of CPIAL (Consumer price index for agricultural labour) as a deflator to change nominal farm income to real farm income.

Steps taken by the Govt:

  • To provide income support to all farmers’ families across the country, to enable them to take care of expenses related to agriculture and allied activities as well as domestic needs, the Central Government started a new Central Sector Scheme, namely, the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN). The scheme aims to provide a payment of Rs. 6000/- per year, in three 4-monthly installments of Rs. 2000/- to the farmer’s families, subject to certain exclusions relating to higher-income groups.
  • Further to provide a social security net for Small and Marginal Farmers (SMF) as they have minimal or no savings to provide for old age and to support them in the event of the consequent loss of livelihood, the Government has decided to implement another new Central Sector Scheme i.e. Pradhan Mantri Kisan MaanDhan Yojana (PM-KMY) for providing old-age pension to these farmers.
    • Under this Scheme, a minimum fixed pension of Rs. 3000/- will be provided to the eligible small and marginal farmers, subject to certain exclusion clauses, on attaining the age of 60 years.
  • To provide better insurance coverage to crops for risk mitigation, a crop insurance scheme namely Pradhan Mantri Fasal Bima Yojana (PMFBY) was launched from Kharif 2016 season.
    • This scheme provides insurance cover for all stages of the crop cycle including post-harvest risks in specified instances, with low premium contribution by farmers.
  • Giving a major boost for the farmer’s income, the Government has approved the increase in the Minimum Support Price (MSPs) for all Kharif & Rabi crops for the 2018-19 season at a level of at least 150 percent of the cost of production.
  • Implementation of flagship scheme of distribution of Soil Health Cards to farmers so that the use of fertilizers can be rationalized.
  • “Per drop more crop” initiative under which drip/sprinkler irrigation is being encouraged for optimal utilization of water, reducing the cost of inputs and increasing productivity.
  • “Paramparagat Krishi Vikas Yojana (PKVY)” for promoting organic farming.
  • Launch of the e-NAM initiative to provide farmers an electronic transparent and competitive online trading platform.
  • Under “Har Medh Par Ped”, agroforestry is being promoted for additional income.  With the amendment of the Indian Forest Act, 1927, Bamboo has been removed from the definition of trees.
    • A restructured National Bamboo Mission has been launched in the year 2018 to promote bamboo plantation on non-forest government as well as private land and emphasis on value addition, product development, and markets.
  • Giving a major boost to the pro-farmer initiatives, the Government has approved a new Umbrella Scheme ‘Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA)’. 
    • The Scheme is aimed at ensuring remunerative prices to the farmers for their produce as announced in the Union Budget for 2018.
    • This is an unprecedented step taken by Govt. of India to protect the farmers’ income which is expected to go a long way towards the welfare of farmers.
  • Bee keeping has been promoted under Mission for Integrated Development of Horticulture (MIDH) to increase the productivity of crops through pollination and increase honey production as an additional source of income for farmers.
  • To ensure the flow of adequate credit, Government sets an annual target for the flow of credit to the agriculture sector, Banks have been consistently surpassing the annual target.
    • The agriculture credit flow target was set at Rs. 13.50 lakh crore for the F.Y.2019-20 and Rs.15.00 lakh crore for F.Y. 2020-21.
  • Extending the reach of institutional credit to more and more farmers is a priority area of the Government and to achieve this goal, the Government provides interest subvention of 2% on short-term crop loans up to Rs.3.00 lakh. Presently, the loan is available to farmers at an interest rate of 4% per annum on prompt repayment.
  • Further, under Interest Subvention Scheme 2018-19, to provide relief to the farmers on the occurrence of natural calamities, the interest subvention of 2% shall continue to be available to banks for the first year on the restructured amount.
  •  To discourage distress sale by farmers and to encourage them to store their produce in warehouses against negotiable receipts, the benefit of interest subvention will be available to small and marginal farmers having Kisan Credit Card for a further period of up to six months post-harvest on the same rate as available to crop loan.
  • The Government has extended the facility of Kisan Credit Card (KCC) to the farmers practicing animal husbandry and fisheries-related activities.
    • All processing fees, inspection, ledger folio charges, and all other services charges have been waived off for the fresh renewal of KCC.
    • Collateral fee loan limit for short-term agri-credit has been raised from Rs.1.00 lakh to Rs.1.60 lakh. KCC will be issued within 14 days from the receipt of a completed application.
  • Several market reforms have been rolled out. These include
    • Model APLMC (Promotion & Facilitation) Act, 2017
    • Establishment of 22,000 number of Gramin Agriculture Markets (GrAMs) as aggregation platforms
    • Agri-Export Policy, that targets to double agri-exports by 2022
    • The Farmers Produce Trade and Commerce (Promotion & Facilitation) Act 2020
    • The Farmers (Empowerment & Protection) Agreement on Price Assurance and Farm Services Act, 2020
    • Amendments to Essential Commodities Act, 1955, that deregulates various agri-commodities
    • Promotion of 10,000 FPOs by 2024
  • Creation of Corpus Funds:
    • Micro Irrigation Fund – Rs. 5,000 crore
    • Agri-marketing Fund to strengthen eNAM and GrAMs – Rs. 2,000 crore
    • Agricultural Infrastructure Fund (AIF) to build agri-logistics (backward & forward linkages) – Rs. 1 lakh crore.

Concluding Remarks:

To secure the future of agriculture and to improve the livelihood of half of India’s population, adequate attention needs to be given to improve the welfare of farmers and raise agricultural income. It is essential to mobilize States and UTs to own and achieve the goal of doubling farmers’ income with an active focus on capacity building (technology adoption and awareness) of farmers that will be the catalyst to boost farmer’s income.

Since India is a diverse country where the majority of agriculture is monsoon dependent, therefore, interventions are needed which includes research, technology promotion, extension, post-harvest management, processing, and marketing, in consonance with the comparative advantage of each State/region and its diverse agro-climatic features; and then the Country can indeed achieve the goal of doubling farmers’ income by the year 2022.




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