Doubling Famers' Income and Measures Taken by Government for DFI

August 08, 2021
Doubling Famers' Income and Measures Taken by Government for DFI

Agriculture sustains livelihood for more than half of India's total population. Doubling farmers’ income in such a short period is an overwhelming task for decision makers, scientists and policy makers because of its continued role in employment, income and most importantly in national food security.

Doubling farmers’ income is possible through increasing total output and better price realization in the market, reduction in production costs, diversification of product, efficient post-harvest management, value addition, etc.

Key Timeline Set by Govt for Doubling Farmers' Income: 
  • The reference year for farmer income is 2015-16 and target year is 2022-2023.
  • The aim is to double the Real Income of farmer and not the nominal income.
  • According to NITI Aayog, farmers’ income in 2015-16 was Rs. 44027 in real terms.
  • In order to achieve the aim, an annual growth of 10.41% is required in farmers’ income.

Need to Double Farmers Income?
  • Past strategy for development of the agriculture sector in India has focused primarily on raising agricultural output and improving food security.
  • The strategy did not explicitly recognize the need to raise farmers' income resulting in low income of farmers.
  • Farmers' income also remained low in relation to income of those working in the non­ farm sector.
  • India also witnessed a sharp increase in the number of farmers suicides due to losses from farming, shocks in farm income and low farm income.
  • The low farm income is forcing more and more cultivators, particularly younger age group, to leave farming.
  • This can have an adverse effect on the future of agriculture in the country, leading to food insecurity.
  • Therefore, there is need to double farmers income to promote farmers' welfare, reduce agrarian distress and bring parity between income of farmers and those working in non-agricultural professions.


Steps for Doubling Farmers' Income

The Government constituted an expert Committee in April, 2016 headed by Ashok Dalwai to examine issues relating to “Doubling of Farmers Income” (DFI) and recommend strategies to achieve the same. 

The Committee submitted its Report to the Government in September, 2018 containing the strategy for doubling of farmers’ income by the year 2022.  

The DFI strategy as recommended by the Committee include seven sources of income growth: 
  • Improvement in crop productivity
  • Improvement in livestock productivity
  • Resource use efficiency or savings in the cost of production
  • Increase in the cropping intensity
  • Diversification towards high value crops
  • Improvement in real prices received by farmers
  • Shift from farm to non-farm occupations.
Doubling Famers' Income and Measures Taken by Government for DFI


Broad Strategy for Improving Farmers Income

Productivity :  Area-agricultural output has to be increased through access to irrigation and technological advancement.

Increase in cropping intensity: Increase in cropping intensity, i.e. the ratio of Net Area Sown to the Total Cropped Area. 
  • By raising short duration crops after the main kharif and after the main rabi season so that agricultural land does not remain unused for half of the productive period.
Diversification:
  • Towards high value crops like fruits, vegetables, fiber, condiments & spices and sugarcane.
  • Towards other allied enterprises like forestry, dairy rather than depending primarily on crop cultivation.
Shifting cultivators from farm to non-farm occupations: Non-farm sectors provide 2.76 times more productive employment than agriculture sector in rural areas

Improvement in terms of trade for farmers or real prices received by farmers: Use of CPIAL (Consumer price index for agricultural labour) as a deflator to change nominal farm income to real farm income.


Challenges to Doubling Farmers' Income:

To achieve the target of doubling farmers' income by 2022, the Economic Survey 2021 has highlighted few basic challenges which needs to be addressed:

Extension of Irrigation Facilities:
  • The coverage of irrigation facilities needs to be extended while ensuring an effective water conservation mechanism.
Improve Agricultural Credit:
  • An inclusive approach to provision for agricultural credit has to be undertaken to address the issue of skewness in its regional distribution, it said.
Land Reform:
  • As the proportion of small and marginal holdings is significantly large, land reform measures like freeing up land markets can help farmers improve their Income.
Boost to Allied Sectors:
  • Allied sectors, such as animal husbandry, dairying and fisheries, need to be given a boost to provide an assured secondary source of employment and income, especially for small and marginal farmers.
Farm Mechanization:
  • There is also a need to address the issue of lower farm mechanization in India which is only about 40% as compared to about 60% in China and around 75 % in Brazil.
Improving Food Processing Sector:
  • More focused attention" is required to be given to the sector due to its significant role in reducing post-harvest losses and creation of an additional market for farm outputs.
  • The food processing sector is growing at an average annual growth rate of more than 5% over the last six years ending 2017-18.
Exploring Global Markets:
  • There is a need to give increased focus on exploring global markets for agricultural commodities to give an additional source of market for the surplus of agricultural produce India currently has.
Reallocation of Labour:
  • There is also a need to reallocate labour resources to other sectors.
  • Though the structural transformations involved a falling share of the agriculture sector and rising share of services sector jobs, more needs to be done to create manufacturing jobs to absorb the large pool of workers.
Other Issues:
  • Issues such as investment in agriculture, insurance coverage, water conservation, improved yields through better farming practices, access to market, availability of institutional credit, increasing the linkages between agricultural and non-agricultural sectors need urgent attention.
Doubling Famers' Income and Measures Taken by Government for DFI
Image Source : Mint


Steps Taken by Government to Double Farmer's Income:

With a view to provide to improve Post Harvesting Agriculture Infrastructure, Govt has launched Agriculture Infrastructure Fund. 
  • The Agriculture Infrastructure Fund is a medium - long term debt financing facility for investment in viable projects for post-harvest management infrastructure and community farming assets through interest subvention and credit guarantee. 
  • The duration of the scheme is from FY2020 to FY2029 (10 years). 
  • Under the scheme, Rs. 1 Lakh Crore will be provided by banks and financial institutions as loans with interest subvention of 3% per annum and credit guarantee coverage under CGTMSE for loans up to Rs. 2 Crores. 
  • Eligible beneficiaries include farmers, FPOs, PACS, Marketing Cooperative Societies, SHGs, Joint Liability Groups (JLG), Multipurpose Cooperative Societies, Agri-entrepreneurs, Start-ups, and Central/State agency or Local Body sponsored Public-Private Partnership Projects.

With a view to provide income support to all farmers’ families across the country, to enable them to take care of expenses related to agriculture and allied activities as well as domestic needs, the Central Government started a new Central Sector Scheme, namely, the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN). 
  • The scheme aims to provide a payment of Rs. 6000/- per year, in three 4-monthly installments of Rs. 2000/- to the farmers families, subject to certain exclusions relating to higher income groups. 

Further with a view to provide social security net for Small and Marginal Farmers (SMF) as they have minimal or no savings to provide for old age and to support them in the event of consequent loss of livelihood, the Government has decided to implement another new Central Sector Scheme i.e. Pradhan Mantri Kisan MaanDhan Yojana (PM-KMY) for providing old age pension to these farmers. 
  • Under this Scheme, a minimum fixed pension of Rs. 3000/- will be provided to the eligible small and marginal farmers, subject to certain exclusion clauses, on attaining the age of 60 years. 

With a view to provide better insurance coverage to crops for risk mitigation, a crop insurance scheme namely Pradhan Mantri Fasal Bima Yojana (PMFBY) was launched from Kharif 2016 season. 
  • This scheme provides insurance cover for all stages of the crop cycle including post-harvest risks in specified instances, with low premium contribution by farmers.

Giving a major boost for the farmer’s income, the Government has approved the increase in the Minimum Support Price (MSPs) for all Kharif & Rabi crops for 2018-19 season at a level of at least 150 percent of the cost of production.

Implementation of flagship scheme of distribution of Soil Health Cards to farmers so that the use of fertilizers can be rationalized.

“Per drop more crop” initiative under which drip/sprinkler irrigation is being encouraged for optimal utilization of water, reducing cost of inputs and increasing productivity.

“Paramparagat Krishi Vikas Yojana (PKVY)” for promoting organic farming.

Launch of e-NAM initiative to provide farmers an electronic transparent and competitive online trading platform.

Under “Har Medh Par Ped”, Agro forestry is being promoted for additional income.  
  • With the amendment of Indian Forest Act, 1927, Bamboo has been removed from the definition of trees. 
  • A restructured National Bamboo Mission has been launched in the year 2018 to promote bamboo plantation on non forest government as well as private land and emphasis on value addition, product development and  markets.

Government has approved a new Umbrella Scheme ‘Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA)’.  
  • The Scheme is aimed at ensuring remunerative prices to the farmers for their produce as announced in the Union Budget for 2018. 
  • This is an unprecedented step taken by Govt. of India to protect the farmers’ income which is expected to go a long way towards the welfare of farmers.

Bee keeping has been promoted under Mission for Integrated Development of Horticulture (MIDH) to increase the productivity of crops through pollination and increase the honey production as an additional source of income of farmers.

The Government has extended the facility of Kisan Credit Card (KCC) to the farmers practicing animal husbandry and fisheries related activities.  
  • All processing fee, inspection, ledger folio charges and all other services charges have been waived off for fresh renewal of KCC.
  •  Collateral fee loan limit for short term agri-credit has been raised from Rs.1.00 lakh to Rs.1.60 lakh. 
  • KCC will be issued within 14 days from the receipt of completed application.

Several market reforms have been rolled out. These include
  • Model APLMC (Promotion & Facilitation) Act, 2017
  • Establishment of 22,000 number of Gramin Agriculture Markets (GrAMs) as aggregation platforms
  • Agri-Export Policy, that targets to double agri-exports by 2022
  • The Farmers Produce Trade and Commerce (Promotion & Facilitation) Ordinance, 2020
  • The Farmers (Empowerment & Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020
  • Amendments to Essential Commodities Act, 1955, that deregulates various agri-commodities
  • Promotion of 10,000 FPOs by 2024

Creation of Corpus Funds
  • Micro Irrigation Fund – Rs. 5,000 crore
  • Agri-marketing Fund to strengthen eNAM and GrAMs – Rs. 2,000 crore
  • Agricultural Infrastructure Fund (AIF) to build agri-logistics (backward & forward linkages) – Rs. 1 lakh crore

Suggestions to Double Farmer's Income
  • The country need to increase use of quality seed, fertilizer and power supply to agriculture.
  • Area under irrigation has to be expanded by 1.78 million hectare and area under double cropping should be increased by 1.85 million hectare every year.
  • Besides, area under fruits and vegetables is required to increase by 5 per cent each year.
  • In the case of livestock, improvement in herd quality, better feed, increase in artificial insemination, reduction in calving interval and lowering age at first calving are the potential sources of growth.
  • Adoption of agronomic practices like precision farming to raise production and income of farmers substantially.
  • About one third of the increase in farmers' income is easily attainable through better price realization, efficient post-harvest management, competitive value chains and adoption of allied activities. This requires comprehensive reforms in market, land lease and raising of trees on private land.
  • Most of the development initiatives and policies for agriculture are implemented by the States. Therefore, it is essential to mobilize States and UTs to own and achieve the goal of doubling farmers' income.
  • There is a need to liberalize agriculture to attract responsible private investments in production and market. Similarly, FPO (Farmers producer organization)/FPC (Farmers producer company) can play big role in promoting small farm business.
  • Public investment in agriculture must be raised to 4% of the GDP, which is currently only 2.76%
  • NITI Aayog’s Model Land Leasing Act must be adopted by all the states and UTs in a time bound manner. It will bring the futile land into much needed use for operational efficiency.
  • There is need to promote use of environment friendly automated farm machinery tools suited to small scale operations. The Custom Hiring Centers (CHCs) can be set up to promote use of high-tech machinery for the mechanization of small and marginal farm holding.


Source : TH, PIB, Mint


Brajesh Mohan

Posted by Brajesh Mohan

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