Have Farmers’ Incomes Doubled?
This factsheet is the first in a new research series by SPRF India that critically analyses the Doubling Farmers’ Income [DFI] initiative of the Government of India [GoI]. The series seeks to provide a comprehensive look at the farm income growth in the country by evaluating existing data and reviewing the status of the implementation of various recommendations made by the DFI committee.
On 13th April 2016, the GoI constituted the Committee on Doubling Farmers’ Income under the Chairmanship of Dr. Ashok Dalwai. The target of doubling farmers’ earnings was first mentioned by Prime Minister Narendra Modi at a public gathering in Bareilly in February 2016 (Committee on Doubling Farmers’ Income [DFI] 2017). Central government had to meet the target in the seven years between 2016 and 2023. By September 2018, the DFI committee submitted a comprehensive set of analyses and recommendations in its 14-volume report.
Factsheet 1 looks at the growth of farm incomes across India from 2012-13 to 2018-19 and estimates the growth rate till 2022-23. Here, it is essential to understand that at the heart of the government’s DFI initiative was an “income enhancement approach to farmers’ welfare” (DFI 2017). The approach looks at farmers’ issues as primarily stemming from two kinds of risks, environmental and market-related. These risks lead to low and highly fluctuating income for the average farmer. Therefore, as per the committee, any solution to agrarian distress has to ensure high and steady incomes for farmers. Thus, farm income is a critical indicator in analysing farmers’ welfare in the country.
For context, the DFI committee defines Farmers’ welfare as follows: “Farmers’ welfare refers to a state of his general well-being, wherein an agricultural household aided by its own farm and non- farm incomes and social security support is able to satisfy economic, social and psychological needs of all its members, besides the investments required for sustainable agricultural operations.” (DFI 2017).
Methodology
Simply put, farm income is the money earned from only farm-related activities. The situation assessment survey of agricultural households [SAS] conducted by the National Statistical Office [NSO] (2019) includes crop production, animal husbandry, land leasing2, and agricultural wages within farm-related activities. Comparing farm incomes from the 70th round of the SAS (2012-13) and the 77th round (2018-19) offers a glimpse at the status of farmers’ welfare in India. Taking average monthly income data from the two editions of the SAS, we first calculated annual farm income. Then, we calculated Real farm income using the Consumer Price Index for Agricultural Labourers (CPI-AL). For 2013 the CPI-AL was 6.72, and for 2019 it was 9.07. Then the compound annual growth rate [CAGR] of real incomes was computed using the following formula:
CAGR = (real income 2019/real income 2013)1/6 – 1
Finally, the real income growth rate for 2019-20, 2020-21, 2021-22, and 2022-23 was estimated using the CPI-AL for 2020.
Trends in Farm Income
The all-India average annual income from farming activities in 2013 was Rs. 70,980 at 2013 prices and Rs. 10,562.5 in terms of real income (adjusted for inflation). In 2019, farm income was Rs. 1,14,924 and Rs. 12,493.5 when adjusted for inflation. Using the two real income numbers in the above formula results in a 2.84% CAGR for the country. Figure 1 shows the map of India with all India and state-wise CAGR.
At the state level, Uttarakhand recorded the highest CAGR of 12.69%, with Meghalaya coming in second at 11.86% and Bihar completing the top 3 at 8.47%. At the other end of the spectrum, we have Nagaland with a negative growth rate during this period coming in at -5.21%. Just above Nagaland in this respect are Odisha with -4.18% and Jharkhand with -4.08%. Negative growth implies that incomes have fallen during this period.
Among major agricultural states, Andhra Pradesh recorded the highest CAGR at 4.18%, followed by West Bengal at 4.14%, Uttar Pradesh at 3.52%, Maharashtra at 3.09%, Haryana with 1.75%, and Punjab at -0.22%. However, these states still have much higher farm incomes than smaller states in absolute terms. However, the low CAGR reflects stagnating growth in farm incomes across these states, particularly in Punjab, where income shows a net decline.
This factsheet used the all-India CAGR to estimate the absolute income for 2022-23, which was the GoI’s target year to double farmers’ income. Calculations show that in nominal terms, the expected income would be Rs. 1,33,567. This figure falls short of the committee’s target of a nominal income of Rs. 1,63,4562 . Assuming the CPI-AL in 2020 holds for 2023, the real income would be Rs. 13,629.
Factsheet developed by Ayush Arya, Jitendra Bisht and Neha Chauhan from SPRF’s research team and designed by SPRF’s design consultant Deepesh Sangtani.
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References
Committee on Doubling Farmers’ Income. (2017). Report of the Committee on Doubling Farmers’ Income, Volume 1: March of Agriculture since Independence and Growth Trends. New Delhi, India: Department of Agriculture, Cooperation and Farmers’ Welfare, Ministry of Agriculture & Farmers’ Welfare, Government of India. Accessed 17 January 2022, https://farmer.gov.in/imagedefault/DFI/DFI%20Volume%201.pdf.
National Statistical Office. (2021). Situation Assessment of Agricultural Households and Land and Holdings of Households in Rural India, 2019. New Delhi, India: Ministry of Statistics and Programme Implementation, Government of India. Accessed 17 January 2022, http://www.indiaenvironmentportal.org.in/files/file/agricultural%20%20housholds.pdf.
National Data Archive. (2021). “India – Situation Assessment of Agricultural Households, January-December 2013, NSS 70th Round”. New Delhi, India: Ministry of Statistics and Programme Implementation, Government of India. Accessed 17 January 2022, http://microdata.gov.in/nada43/index.php/catalog/133.
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1 Not included in calculations in this factsheet as income from land leasing was missing from the 2012-13 SAS.
2 The DFI committee target includes income from land leasing which is not included in our calculations. Since it is a minor component of farm income, the nominal income estimate for 2022-23 would still fall short of the DFI committee targets even if income from land leasing was included.