In 2016, Prime Minister Narendra Modi promised that the Government aims to double the farmers’ income by 2022. It’s 2022 and a fair time to evaluate the situation. However, firstly let’s understand the problems with India’s farming model. Indian Farming is largely dependent on the monsoon. When the monsoons aren’t kind, crops fail, and farmers’ income tanks plunge into a vicious cycle of debt. On the contrary, during bumper harvests, excess supply lowers their income and sometimes, their stockpiles even go unsold. The Government only offers the minimum support prices (MSP) on select crops and it is already hurting the Government’s budget a lot. Another problem with India’s farming is land ownership as 86% of farmers in India own less than 2 hectares of land, with 126 million farmers owning 0.6 hectares on average. This leads to monocropping i.e. growing just one crop at a time and destroying the soil health and lowering the crop yields. To compensate, the farmers resort to excessive use of fertilisers which helps in the short run, however, in long run kills the fertility of their land and also overburdens them with debt.
The latest report from the State Bank of India points out that farmers’ income in India has increased by 1.3 to 1.7 times during the period from FY 2018 to FY 2022. For cash crops like soybean, tea, coffee, and cotton, the income has doubled for real, however, for non-cash crops like wheat, rice, maize, and millets, income hasn’t increased much. Surprisingly, this doesn’t include the data from FY 2016 and FY 2017 which if included would portray a completely different picture. Diving into the report reveals that things have become a bit worse than originally imagined. The Ashok Dalwai Committee had categorically stated that the goal of doubling income must be measured in real terms and not nominal. The actual earnings here are termed ‘Nominal income’. The problem with comparison on nominal terms is that the income can increase merely because of inflation and while this may not necessarily mean an increase in the purchasing power of the farmers. Hence, nominal income is adjusted against inflation and the resultant is known as ‘Real income’. The SBI’s report doesn’t talk about Real Income anywhere in the report and the numbers indicate a ‘Nominal Growth’ and we know how inflation has increased in recent times. A recent survey conducted by the National Sample Survey Office (NSSO) on agricultural household income between 2012–13 and 2018–19, reveals that the growth is just 3.5% in real terms. So, it might seem that the farmers’ income has increased, but the growth isn’t what was promised and expected.