JOURNAL OF CRITICAL REVIEWS

ISSN- 2394-5125 VOL 7, ISSUE 18, 2020

Doubling of Farm Income in : Its Prospects and Challenges 1Navajyoti Gogoi 1Research Scholar, Gauhati University

Received: 20 May 2020 Revised and Accepted: 25 June 2020

Abstract: Though the second largest contributor of world agricultural production, but relative farm income of the farmers of India is very low. Heavy dependency on monsoon, large amount of working population engaged in agricultural sector, technological gap, fragmentation of agricultural land holding are responsible for low farm income in India. To increase the farm income and promote welfare level of Indian farmers has adopted a strategy called “Doubling of Farmers’ income by 2022” in 2016. Based on secondary data from 1993-94 to 2015-16 this paper tries to examine the prospects of achieving the goal within the targeted period. It further calculates the growth rate of farm income by using simple growth estimating formula and also calculates the required growth rate of farm income to make it happen. It found that, apart from the production enhancing measures post production issues related with farm output, development of new institutions and reviving of existing ones is crucial for accelerating growth rate of farm income. On the basis these factors the present paper attempts to analyse prospects and challenges of doubling farm income. Keywords: Doubling of farm income, farmers’ income, growth rate of farm income, prospects, challenges

I. INTRODUCTION Farm income refers to the profits and losses arising from the operation of a farm during a specified accounting period: the calendar year for farmers, from 1st Jan. to 31st Dec. The term farm is used for specialized units such as arable farms, vegetable farms, dairy, pig and poultry farms and land used for the production of natural fibres, bio fuel and other commodities including aquaculture. In India farming sector absorbs a huge portion of its total working population and contributes significantly less amount towards country’s GDP compare to its employment. In contrast to it, farming sector absorbs a relatively less amount of the total working population in the economically advanced countries. Though India is the second largest contributor of world agricultural production, but the relative farm income of the farmers of India is far below than that of the developed nations. Heavy dependency on monsoon, problem of large amount of working population engaged in agricultural sector, technological gap, inadequate amount of agricultural land holding by the farmers of India which are the main factors responsible for low farm income in India. To increase the income of the farmers, Government of India sets a target called “Doubling of Farmers’ Income by the year 2022” in February 2016. In this context Govt. had been making integrated efforts and initiated and at same time adopted a set of multiple reforms. A committee was also set to meet the targeted goals under the headship of Ashok Dalwai. The committee had identified some factors by which famers’ income could be accelerated consisting both the on-farm and non-farm factors. The present study is an attempt to show the recent trend of farm income as well as to analyse the various factors and challenges of doubling farm income. Though the Government have considered both the on-farm and non-farm income of the farmers while talking about the goal of doubling farmers’ income. But in this paper, we have considered only the on-farm income of the farmers and the non-farm income is completely ignored while discussing about the target. II. OJECTIVES The present study is intended to analyse the following two objectives: 1. To study the past trend of farm income in India. 2. To examine the prospects and challenges of doubling farm income in India. III. DATA SOURCES AND METHODOLOGY The present study is descriptive in nature and involved data collection from secondary sources. To make the study comprehensive, different journals, research articles, e-books and newspapers are used. To analyse the trend of farm and farmers’ income from 1993-94 to 2015-16 necessary data are collected from policy paper of NITI Aayog, and also the growth rate of per cultivator farm income is calculated for the years taken into consideration. The other important data which have been analysing in this paper are taken from several Government organisations: NSSO, CSO, NABARD, SAS (2003) and SAS (2013). Besides, with the help of the following formula, the annual required growth rate of per- farmer income is estimated, so that it can meet the target by the year 2022-23:

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ISSN- 2394-5125 VOL 7, ISSUE 18, 2020

t Yt = Y0 (1+r) .

Where, Yt = Required farmer’s income

Y0 = Farmer’s income at the base year r = Required growth rate t = Time period. Here, we have considered only the on-farm income of the farmers and the non-farm income like non-farm wages and salaries are completely ruled out while calculating the growth rate of per-farmer income. IV. TREND OF INDIA’S FARM INCOME IN POST REFORM PERIODS Since we hardly found any adequate information about the farm income, therefore it often seems too difficult to study current and past trend of farm income properly. Some researchers have tried to measure the farm income and, in this regard, a notable study is made by Ramesh Chand (2015) and calculated the total and per-cultivator farm income for the period 1993-94 to 2015-16. To estimate the income of agricultural household, two national level surveys of NSSO titled Situation Assessment Survey of Farmers (2003) and Situation Assessment Survey of Agricultural Households (SAS) in 2013 were conducted. They provided estimates of farmers’ income from various agricultural and non-agricultural sources. According to data provided by SAS for the year 2012-13, the average annual income of a farm household was Rs. 77,112 (current prices) out of which 60% were derived from farm activities and remaining 40% were derived from non-farm activities (wage, salary, non-farm business etc.). From their data it is found that, in 2012-13 the share of livestock activity in the total farm income was close to 19.89%, which was much lower than CSO estimates of share of livestock in net value added in agriculture sector for the same year which was 28.6% by CSO estimation. This difference was found due to the adoption of different definitions used by SAS and CSO (specific definition of farmer used in the SAS 20131). The most recent estimates of farm income were prepared by Ramesh Chand (2015) for the period 1993-94 to 2015-16 which is presented in the table 1 at nominal as well as at real prices. Table I: Total Farm Income of all Farmers (Rs. Crore) YEAR CPIAL Market price Real price Cultivators (number in (2004-05=100) (INR) (INR) crores) 1993-94 59 177954 303814 14.39 1999-00 90 335631 372923 13.88 2004-05 100 434160 434160 16.61 2011-12 183 1157128 632514 14.62 2012-13 220 1312730 596695 14.36 2013-14 245 1477159 602922 14.1 2014-15 261 1558223 597020 13.85 2015-16 273 1634625 598764 13.6 Source: National Institution for Transforming India, Government of India, New , March 2017 Note: Farmers’ income is expressed in real terms using CPIAL2 (2004-05) as deflator.

From the table 1 it is seen that during past 22 years between 1993-94 and 2015-16, farmers’ income in nominal terms increased from Rs.177954 Cr. to Rs.1634625 Cr. which is 9.18 times of 1993-94s income. Due to CPIAL changed by 4.62 times, real income of all farmers just got doubled in this 22-years period. According to the data presented in the table reveal that during 1993-94 to 2004-05, the first decade of the economic liberalisation CPIAL increased at 4.91% annually, while income of all farmers increased by 8.45% annually at nominal price. The real annual growth rate of farmers’ income was just 3.30%. This shows, in real term farmers’ income increased very slowly relative to nominal term.

1 SAS defines an agricultural household as a household receiving some value of produce more than Rs.3000 from agricultural activities and having at least one member self-employed in agriculture during last 365 days. 2CPIAL: Consumer Price Index for Agricultural Labourers has been compiling Consumer Price Index for agricultural labourers since September, 1964. 1792 JOURNAL OF CRITICAL REVIEWS

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Since total farm income of all farmers do not reflect the overall welfare level of farmers, therefore the following table is presented to analyse the trend of per-farmer income from 1993-94 to 2015-16: Table II: Per-Cultivator Farm Income INR YEAR Cultivators CPIAL Current Price Real Price Growth rate Growth rate number (in (2004- at Current at Real Price

crores) 05=100) Price 1993-94 14.39 59 12365 20958 1999-00 13.88 90 24188 26876 _ _ 2004-05 16.61 100 26146 26146 _ _ 2011-12 14.62 183 79137 43244 _ _ 2012-13 14.36 220 91416 41553 15.52 -3.91 2013-14 14.10 245 104763 42760 14.60 2.91 2014-15 13.85 261 112507 43106 7.39 0.81 2015-16 13.60 273 120193 44027 6.83 2.14 Source: National Institution for Transforming India, Government of India, New Delhi, March 2017 Note: Data for some particular years were not found. The above table presents the annual per cultivator income for the same period of time explained in the previous table (table 1) and shows that per-cultivator income during this timeframe was increasing at current price, while per cultivator income at real price was volatile. From the table 2 it is seen that during the period of 1993-94 to 2004-05, number of cultivators had increased from 14.39 crores to 16.61crores, due to which per cultivator income was increased very slowly. From 2004-05 to 2011- 12 per famer income was increased rapidly, because a large number of farmers moved from farming sector to non-farming sector. Apart from withdrawal of farmers many favourable combinations like higher growth of output, higher prices of output worked to grow per farmer income between this period. But this trend of growth of farm income turned to setback after 2011-12 and continues for consecutive years till 2015-16 due to occurrence of unusual monsoons in the year 2014-15 and 2015-16. From the above data we can easily compute the growth rate required to make farmer’s income double by 2022-23. To calculate the required growth rate, we use the following formula:

t Yt = Y0 (1+r)

Here, Yt = Required farmer’s income (88054)

Y0 = Farmer’s income at the base year 2015-16 (44072) r = Required growth rate t = Time period (7 years) Now by solving the equation for r we will have, r = 10.41% So, we need a growth rate of 10.41% (in real terms) per year to make per farmer’s income double by 2022-23. But from this past trend of farm income, we can see that it took 22 years to make per famer income as well as all farmers’ income double in real term, therefore to make farmers’ income double within the targeted years taking the base year as 2015-16 stakeholders’ and other agencies related with farming sector need to take steps for accelerating growth rate of farm income. V. PROSPECTS AND SOURCES OF DOUBLING FARM INCOME To make farmers’ income double by the year 2022-23 in real term taking 2015-16 as the base year agriculture needs to be grow at 14.81% per annum, but this growth rate didn’t achieve even in one single year in Indian agriculture. If we study the recent data, it is found that, in 2017-18 the growth rate of agriculture and allied activities was 5%, which directly slipped into 2.7% in 2018-19. In this regards it is more important to accelerate the ongoing and previously achieved growth rate of agriculture to accomplish the goal by paying special attention into the various sources. A. Increasing agricultural output Increasing productivity and increasing net sown area are the two main sources to increase agricultural output. Due to the higher demand for land in non-agricultural uses and high share of arable land in total geographical area, it is not feasible to increase

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ISSN- 2394-5125 VOL 7, ISSUE 18, 2020 cultivated land in the country. Therefore, increasing agricultural productivity is an important alternative to promote agricultural output, (Chand, 2017). Productivity of crops in India is comparatively low and even below the world average and much lower than agriculturally advanced countries. Besides, crop productivity is varied significantly across the states. But there is considerable potential to raise productivity of agricultural crops through improvement in productivity of per unit of agricultural land. Variation in the crop productivity among the states had arisen basically due to the differences in the use of the irrigation facilities. According to district wise data published in the Policy Paper of NITI Aayog No.1/2017, per hectare productivity of all crops was Rs56,510 under largely irrigated areas and Rs.35,352 under largely rain fed conditions during the period 2011-12. From their data it can be seen that, some districts with same level of irrigation facilities possessed different level of agricultural productivity. Inaccessibility of irrigation facilities coupled with poor adoption of improved agricultural technology make productivity differences across the regions. Expanding irrigation facilities to all cultivated land and improving agricultural technology are two most important instruments to increase agricultural productivity and output in the country. The study of data from the policy paper of NITI Aayog found that, between 2000-01 and 2013-14 the aggregate productivity of all crops taking together annually increased by 3.1%. Whereas, productivity of inputs also increased at same rate and made no change in resource use efficiency. If this growth rate in agriculture will maintain in the subsequent years then total farm income will increase 16.7% by 2020-21 (compare to 2013-14 income) and 25% by 2023-24. During the period between 2000- 01 and 2013-14, crop sector contributed 70% of total agricultural income, while contribution of livestock to total agricultural income was 30%. During this timeframe (2000-01 to 2013-14) livestock was growing at 4.5% per annum. If this growth rate of livestock sector will maintain in subsequent years then it could raise total farm income by 10.8% by 2020-21 and16.6% by 2023- 24. If we take both livestock and crop sector together and their trend of growth rate between the period 2000-01 and 2013-14, then it could increase total farm income up to 27.5% by 2020-21. B. Improving Total Factor Productivity Total factor productivity is that portion of output which is not explained by the amount of inputs used in production process. It is an important source of growth of output and can reduce the cost of production. Through the improvement of TFP, total output can foster more than inputs used in production. Improvement of TFP requires technological change, skill and infrastructure, improve production method etc. According to a study made by Amarnath Tripathi for the period 1969-70 to 2005- 06, growth rate of TFP was almost negative except the period between 1991-92 and 1995-96. Another study made by Fuglie and Rada (2015) found that, growth rate of TFP in agriculture was 2.62% between the periods 2004 to 2012. According to the study made by National Institute of Agricultural Economics and Policy Research, New Delhi, TFP in agriculture grew at the same rate during the same period. If TFP will grow at same rate, then it will lead 26.3% increased of farm income by the year 2022-23. C. Conversion of Staple Crops towards High Value Crops Instead of producing traditional or staple crops at bulk amount, if famers diversify their cropping pattern to high value crops (HVCs)3, then it could meet the targeted growth rate of farm income. Besides, farmers can convert their barren land to make other allied enterprises, by which they can generate higher income than that of producing traditional crops. Availability of thousands of barren lands in India provides huge scope to make forestry. According to the data published by NITI Aayog in 2017, in the year 2013-14 staple crops: cereals, pulses, oilseeds occupied 77% of total cropped area and contributed only 41% of total output of the crop sector. In contrast to it, High Value Crops: fibre, fruits, vegetables, condiments and spices and sugarcane just occupied 19% of total crop area and contributed same value of output as staple crops produced. The area under HVCs in India is increasing over the years at the annual growth rate of 3.31% between the periods 2004-05 and 2013-14. This growth rate of area under HVCs can raise output of crop sector 1% per year and can lead to 5% increase in farm income by 2022-23. D. Increasing Cropping Intensity In most part of India, a single piece of land uses to cultivate only two crops in a year; Kharif and Rabi. But there is significant scope to sow short duration crops after harvesting the main Kharif and Rabi crops with proper irrigation facilities and improve technology. It is found that, more than 60% of agricultural land remain unused for half of the year in India. Lack of irrigation facility in most of the states causes low cropping intensity in India. If farmers intensively cultivate Rabi crops after harvesting Kharif crops in the same port of land, then it could raise farm income more and can eliminate the problem of land constraint. After the year 2000-01, crop intensity in the country increased by 0.7% annually. Moreover, Government schemes like, ‘Har Khet Ko Pani’ and ‘Pradhan Mantri Krishi Sinchai Yojana’ introduced to provide irrigation facilities throughout the country with the viewpoint to make very favourable effect on increasing crop intensity. If the crop intensity will grow at the same rate, then it could raise farm income by 3.4% by the year 2022-23. E. Diversification of Cultivators from Crop Sector to Allied Activities In India compare to crop sector, the no. of farmers engaged in allied activities is significantly low. Allied activities including livestock, forestry, fishery constitute major share of agricultural GDP in the country. In between 1950 and 1990 contribution of livestock towards total agricultural GDP was second highest followed by the crop sector. During the same time

3HVCs: High value Crops refers to no-staple agricultural crops such as vegetables, fruits, flowers, ornamentals, condiments and spices. 1794 JOURNAL OF CRITICAL REVIEWS

ISSN- 2394-5125 VOL 7, ISSUE 18, 2020 period the share of forestry sector decreased from 24% to 13%. Though fisheries account for only a small share of total agricultural GDP but it was doubled in 1990 and reached at 4% from 2% in 1950. The growth rate of fishery sector during this period was higher than forestry and livestock sectors. In 1980, livestock sector accounted 12% of total agricultural GDP while it is stood at 23% in 2013. This past trend of growth of allied sectors reveals a slow growth of allied activities in Indian farming sector, while there is large scope to enrich these sectors to promote farm income and deviation of farmer from crop to non-crop sectors could reduce the pressure on cropping sector and enable the famers to make higher income from farming activities.

VI. CHALLENGES OF DOUBLING FARM INCOME IN INDIA Doubling of farm income is not something that could be done within a short span of time. The Government have to face many challenges over the next few years to make it possible. A. Climate Change In present time, the problem of climate change is less or more experienced by many countries to produce agricultural output. In the context of making farm income double in India, this severe issue arises as one of the major problems in Indian agriculture. Production of agricultural commodity is interdependent at different magnitudes with climate change and negatively related. According to a study made by Guiteras in 2009 finds that, due to the occurrence of climate change crop yield will be decline to 9% by 2039 from 4.5% in 2010. Study of recent data on climate change and farm income found that climate change could reduce farm income by 15-18% in irrigated areas and 20-25% in rain fed areas. Apart from low productivity, climate changes cause resource degradation, changes pest complexities, reduction in TFP etc. Therefore, framing adaptation and mitigation strategies for climate change become more important to address this severe problem. B. Marginalisation of Agricultural Land Holding Another hurdle to make farm income double is marginalisation or fragmentation of agricultural land holding in India. Increasing pressure of population, fall of joint family system, rural indebtedness are some factors responsible for land fragmentation in India. According to the Agriculture census data, average size of agricultural land holding is 1.15 hectares, where 81% of small and marginal farmers possessed on an average less than 2 hectares of land. The fragmentation of land holding causes increasing time and cost of inputs such as labour, fertilizers and pesticides. Moreover, due to the uneconomic size of land holding it is not possible to adopt modern farming technique and also makes it difficult to adopt smooth management of agricultural activities. Low productivity of agricultural output coupled with wastage of land make it difficult to raise farm income, result from land fragmentation in India. C. Inability of the Farmers to Access Credit More than 50% of the rural farmers in India have been depriving from institutional credit facility decades after decade. Lack of adequate collateral of farmers and a smaller number of bank branches in rural India cause inaccessibility of institutional credit in most part of the rural India. Due to which rural cultivators have to rush for non-institutional sources of credit like: village money lender, Mahajan, landlord and have to bear higher rate of interest. Moreover, due to inadequate credit facilities, farmers cannot afford to buy modern farming inputs and have to adopt old method of cultivation which makes low farm income earned by bulk of rural small and marginal farmers. D. Poor Marketing Infrastructure for Agricultural Commodities The most important challenge in the context of doubling farm income is the poor marketing infrastructure for agricultural commodities. Though to promote Agricultural marketing system in India, Government of India introduced several initiatives like: Electronic National Agricultural Market, Upgrade of Rural Haats etc. but still agricultural marketing system dominated by private traders’ at large extent. In the last five years, we have seen many farmers dumping their produce in the streets as the price they have got for their produce is lower than what it would take to transport it back. Market prices of some vegetables are extremely volatile and have crashed below the cost of production for long periods. Part of the reason for the volatility is the seasonality of supply. As supply starts coming in, traders tend to purchase in bulk from buyers at low prices to make staggering sales. The trader then takes advantage of higher prices in offseason. This is a market structure-based problem where the middle man got the profit by paying the farmers minimum profit margins for their products. Hence, inadequate market infrastructure leads to very low income derived from farming sector. Besides these, saturation period experiences by some agriculturally advanced states in India also stand as one of the big hurdles in the context of making farm income double. VII. CONCLUSION Observing the various prospects and challenges and relatively low and fluctuating nature of farm income, we can say that it is very much difficult to make farm income double by the year 2022-23. It could be possible only if ongoing growth rate of farm income accelerate at a high speed in the remaining years. Various development strategies, technology innovations and policy reforms in agriculture together could accelerate the growth rate of farm income. Since, nature of problems is not similar in the different parts of the country, so a uniform strategy to mitigate agricultural crisis may not be the best solution. Diversification of 1795 JOURNAL OF CRITICAL REVIEWS

ISSN- 2394-5125 VOL 7, ISSUE 18, 2020 farmers within the agriculture sector can raise the farm income significantly, and in this regard financial assistance as well as other supportive measures from Government are very much urgent. To overcome the problem of agrarian distress, Government should adopt suitable policy measures, neither it will make detrimental effect on farming sector and will foster farmers, particularly younger age group to leave farming and hence it could make adverse effect on the future of Indian agriculture.

VIII. References [1] Bureau, E. (2019, JULY 4). Govt to double farmers’ income by 2022 by focusing on 7 sources of income, says Economic Survey. Retrieved Dec 25, 2019, from economicstimes.com: https://economictimes.indiatimes.com/news/economy/agriculture/govt-to-double-farmers-income-by-2022-by-focusing- on-7-sources-of-income-says-economic-survey/articleshow/70074052.cms?from=mdr [2] Chand, R. (2017). Doubling Farmers' Income. New Delhi: NITI A ayog. [3] Chandrasekhar, S., & Mehrotra, N. (2016). Doubling Framers' Income by 2022 What Would It Take ? Economic & Political Weekly, 18. [4] Department of Agriculture, C. a. (2016-17). New Delhi: Ministry of Agriculture and Farmers Welfare. [5] Dev, S. M. (2018). Transformation of Indian Agriculture, Growth, Inclusiveness and Sustainability. Mumbai: IGIDR. [6] Hari, S., Khare, P., & Subramanian, A. (2018, Aug 16). Climate change and Indian agriculture. Retrieved Dec 24, 2019, from Ideas For India: https://www.ideasforindia.in/topics/agriculture/climate-change-and-indian-agriculture.html [7] Joshi, P. K. (2017). Enhancing Farmers’ Income: Challenges and Opportunities. Hyderabad: ICRISAT. [8] Kannan, E., & Sundaram, S. (2017). Analysis of Trends in India’s Agricultural Growth. Bangalore: The Institue for Social and Economic Change. [9] Sendhi, R., Balaji, S. J., Ramasundaram, P., Kumar, A., Singh, S., Chatrath, R., & Singh, G. P. (2018). Doubling Farmers Income by 2022: trends, Challenges, Pathway and Strategies. : ICAR. [10] Shanmugan, K., & Prakash, B. B. (2018). Total factor Productivity in India Agriculture: An Exploratory analysis based on literature review. Agricultural Reviews, 39 (2), 113-121. [11] Sharma, A. K. (2015). Transformation in Agriculture, Allied Sectors, and Rural India: Is there less krishi in Bharat? New Delhi: NCAER. [12] Wani, P. S., & Singh, D. (2017). Doubling Farmers’ Income: Challenges and Opportunities. Hyderabad: ICRISAT.

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