The structural shift in Indian agriculture is worrying
In an authoritative official study of the transformation in Indian agriculture, the National Statistical Organisation (NSO) has published a report — Situation Assessment of Agricultural Households and Land and Holdings of Households in Rural India — based on a survey conducted in 2019. The headline numbers seem attractive. Farm incomes have risen by 57% between 2012-13 and 2018-19, at a compounded annual growth rate (CAGR) of 7.3%. The share of agricultural families in debt has decreased from 51.9% to 50.2% in the same period.
But a closer look shows worrying trends. Adjusted with rural inflation, growth in incomes in this period is actually 16.5%, at a CAGR of 2.5%. More significantly, the basket of income sources has changed. In 2012-2013, wages contributed 32% of the income; in 2018-19, they contributed 40% of a farmer’s income. Cultivation contributed 48% of a farmer’s income then, it is now down to 38%. Farm incomes from animals contributed 12% of the income in 2012-13; this number is now up to 16%. And non-farm business incomes have dipped from 8% to 6%. This means that in real terms, income from cultivation has actually dipped by 8.9%. On farm loans too, while the share of families in debt has dipped, the average amount of outstanding loans has increased by 57%; in real terms, this increase is 16.5%.
To be sure, diversification of sources of income is inevitable as the economy changes. But the increase in wages as a component of the income basket, with a decrease in income from both cultivation and non-farm businesses, shows that farmers are not moving into a higher-paying, stable, productive economy but are becoming more reliant on informal labour to sustain their incomes. Indian agriculture needs a more planned structural transformation; the risk of millions with depleted incomes, in debt, reliant on informal seasonal jobs can have a destabilising impact.