Farm income rose 16%, but share from cultivation dropped: NSO data

The numbers are the first indication of how farmers fared under the first Narendra Modi government, and are from the National Statistical Office’s (NSO) results of the “Situation Assessment of Agricultural Households and Land and Holdings of Households in Rural India” (SAS) survey conducted in 2019.
According to the survey, the average debt of a farm household increased by 58% to <span class='webrupee'>₹</span>74,100 in 2018-19, from <span class='webrupee'>₹</span>47,000 during 2012-13.
According to the survey, the average debt of a farm household increased by 58% to 74,100 in 2018-19, from 47,000 during 2012-13.
Updated on Sep 11, 2021 02:26 AM IST
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ByAbhishek Jha, Hindustan Times, New Delhi

Farm incomes rose 57% between 2018-19 and 2012-13, at a compounded annual growth rate of 7.8%, and the inflation adjusted numbers work out to 16% at a CAGR of 2.5%.

Interestingly, much of the increase seems to have come from wages and animal husbandry, with the share of income from cultivation actually declining from 48% to 38%.

The numbers are the first indication of how farmers fared under the first Narendra Modi government, and are from the National Statistical Office’s (NSO) results of the “Situation Assessment of Agricultural Households and Land and Holdings of Households in Rural India” (SAS) survey conducted in 2019.

According to the survey, the average debt of a farm household increased by 58% to 74,100 in 2018-19, from 47,000 during 2012-13. In real terms, that’s a 16.5% increase. But the share of agricultural households with outstanding loans decreased marginally from 51.9% to 50.2%.

The numbers indicate that agriculture has not fared badly under the Modi government, although their income from the production of crops or allied activities has actually declined in real terms; they are also a reflection of the fact that the monsoon has not let down farmers in the past seven years (except in certain parts of the country, but regional variations in income and indebtedness will become clear only in a disaggregated analysis).

The survey is the most comprehensive one on the condition of agricultural households and gives data for the July 2018-June 2019 period. The previous round of this survey was conducted in 2013 and collected data for the July 2012-June 2013 period. This is the first compressive account of the state of farmers under the Modi government.

Agricultural incomes rose...

CAGR of the gross value added or GVA added in agriculture was 3.6% between 2012-13 and 2018-19 (considering a July-June year), the latest two rounds of the SAS rounds. But that doesn’t say much about the condition of farmers in India. The SAS gives data on average income of agricultural households. This was 10,218 per month in 2018-19. To be sure, the household income in this round of the survey included income from rent of leasing out of land, which was not included in 2012-13. Without such rent, the average household income in 2018-19 is 10,084. This is a 57% increase (CAGR of 7.8%) over the nominal income of 6,426 in 2012-13. Adjusting with CPI rural for inflation, makes the growth 16% or a CAGR of 2.5%.

... but were powered by non-cultivation income

An agricultural household may earn from sources other than agriculture, such as wages or non-farm business. Wages, cultivation, farming of animals, and non-farm business had a share of 40%, 38%, 16%, and 6% in 2018-19. These shares were 32%, 48%, 12%, and 8% in 2012-13. This suggests that farming or crop production as an occupation is on the decline. Not only do agricultural households not earn even a majority of their incomes from cultivation, it is not even their largest source of income.

In absolute terms, the nominal income from crop production or cultivation per agricultural household was 3,798 in 2018-19, 23% higher than in 2012-13. However, in real terms it has declined by 8.9%.

To be sure, such decline can also happen if agricultural households (it includes even those who are engaged in animal farming) remain the same or increase, but they don’t earn from production of crops. Therefore, it is important to look at the change in this income per agricultural household actually engaged in crop production. From cultivation or production of crops and related activities alone, the net nominal income (receipts less expense) of households actually engaged in cultivation was 4,001 in 2018-19, 19.4% more than 3,350 in 2012-13. In real terms, such income declined 11.7%.

Not all farmers are part of agricultural households

Not all farmers are part of an agricultural household. The survey defines an agricultural household as one which produces field or horticultural crops, livestock or products of other specified agricultural activities even if it does not possess or operate any land. To exclude households with insignificant production, only households receiving value of produce more than 4,000 and having a member self-employed in agriculture in the previous 365 days are considered. The income cutoff in 2018-19 has been adjusted for inflation – it was 3,000 in 2012-13 – and the definitions are identical to that in 2012-13, the report shows.

What happened to farm loans?

The average amount of outstanding loans per agricultural household was 74,100 in 2018-19, 58% more than 47,000 during 2012-13. In real terms, however, outstanding loans increased by 16.5%. The share of agricultural households with outstanding loans decreased marginally from 51.9% to 50.2%.

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Friday, January 21, 2022