Govt set to open secondary earning avenues to double farmers’ incomes
If the government is looking at doubling ‘nominal’ income of farmers — which denotes income not adjusted for inflation — then it is possible and has happened before, according to economist Abhijit Sen.india Updated: Jan 23, 2018 00:01 IST
To double farm income by 2022, the Modi government is working on training farmers so as to increase their income from secondary sources, and also not accounting for part-time farmers in its calculations.
Experts say while the first is a laudable move, the second is just statistical jugglery.
There are around 120 million households that depend on agriculture for their livelihood.
“Our target is to double farmers’ income, not farm income,” agriculture secretary SK Pattanayak said, explaining that his ministry would take into account both farm and non-farm income sources of farmers.
“That is why we are focusing on skills and creating secondary sources of income in the rural sector,” he said.
The standard measure of farm income is the rate of growth of agriculture GDP, which must jump 100% if farm incomes are to double. To many economists, this looks simply unattainable. The NDA government had unveiled its target of doubling farm income in six years in the Union budget for 2016-17.
Pattanayak said farmers would also gain from transparency in agricultural trade due to the Goods and Services Tax.
“Traders, who dealt in cash only, can’t hide their incomes any longer. Farmers will automatically demand higher prices if they find out the real rates for their produce,” he said.
Still, according to calculations by economist Ashok Gulati, a professor with the think-tank ICRIER, even if farm GDP were to grow at a targeted 4% in 2018-19, the remaining year of the current government’s tenure, average farm growth for five years would still work out to 2.3%, the lowest in two nearly two decades.
In 2017-18, agricultural growth is expected to slow to 2.1%, compared to 4.9% in the previous year, according to official forecasts.
“The goal of doubling farmers’ income is stupendous, cannot be achieved in a business-as-usual scenario and will need something dramatic. So far there is nothing to show that it is possible. Even retaining earlier growth levels looks difficult,” Gulati said.
If the government is looking at doubling “nominal” income of farmers — which denotes income not adjusted for inflation — then it is possible and has happened before, according to economist Abhijit Sen. If the increase is to be “real” — or income that is adjusted for inflation — then it’s a tall order, he added. Income growth is always benchmarked against a corresponding rise in prices because inflation shrinks purchasing power.
On April 13, 2016, the Modi government had set up a committee under Ashok Dalwai, former additional secretary in the agriculture ministry, to prepare a series of reports on doubling farm income. The committee says doubling of farm income means increasing real or inflation-adjusted incomes.
The Dalwai panel, Gulati said, points out that the real incomes of farmers’ need to register a compound annual growth rate of 10.4% for farmers’ incomes to double by 2022. Against this projections, Gulati estimated that real incomes of farmers grew just 2.5% between 2012-13 and 2016-17.
But there could be another way to show an increase.
Economist Ramesh Chand, in-charge of agriculture at Niti Aayog, the government’s main policy think-tank, said the government could count out part-time farmers or people whose main occupation isn’t farming. This will mean a reduction in the total headcount, resulting, statistically, in higher incomes.
“In our country, many people do farming as a secondary occupation. If the principal usual status is not farming, then such a person should not be counted as a farmer. This way, when the denominator (cultivator headcount) decreases, it will naturally increase farm income,” Chand said in an interview.
The usual principal status, according to the methodology used by the National Sample Survey Organisation (NSSO) for employment surveys, is a measure of employment based on time spent on a particular economic activity. Principal status therefore denotes “the activity accounting for majority of a person’s time over the year”, while subsidiary status refers to activities other than the principal activity “undertaken on a short-term basis”.
According to Gulati’s calculations, in the first four years of the previous UPA regime, agriculture GDP grew 3.9%. Compared to this, farm growth under the current government stands at 1.9%.