Is Doubling Of Farmers’ Income By 2022 Feasible?

Doubling of farmer's income is possible, writes the author

Doubling of farmer's income is possible, writes the author
Doubling of farmer's income is possible, writes the author

Prime Minister (PM) Modi’s repeated promise of doubling of farmers’ income by 2022 has been a subject of intense debate in recent times. Opposition leaders (especially those from the Congress) and some economists, (e. g. those opposed to Modi) have ridiculed it saying that this would be possible only if the agriculture sector itself grows at 14% CAGR. This is a completely fallacious premise.

The Central and State Governments need to sit together, plan, communicate to the farmers and execute.

Income conventionally refers to profit, which is different from revenue. Farmers’ revenue need not grow by 14% CAGR for farmers’ income to double by 2022.

Agrarian economics is diverse; there are many variables, like many crops, many geographies and many markets in which they operate, and so it is difficult to generalise them with a single example. Yet, for driving home the point, let’s say a particular farmer with 1 acre of land invests Rs 30,000 in some crop and gets back Rs 40,000 as revenue. His farm income (i.e., profit) is Rs 10,000. If he earns an income of Rs 5,000 after earning revenue of Rs 45,000, he won’t prefer it. So, income is the number that makes sense to him, not revenue.

When the PM promised to double farmers’ income by 2022, the meaning is that by 2022, the same farmer should be able to take home Rs 20,000. This can be accomplished in several ways: say, by increasing the revenue to Rs 50,000 for the same investment of Rs 30,000, or by reducing the investment to Rs 20,000 for the same revenue of Rs 40,000, or by doing both partially (e.g., reducing the investment to Rs 25,000 and increasing the revenue to Rs 45,000). It can even be accomplished by increasing the investment to Rs 40,000 (assisting them with an additional loan of Rs 10,000 somehow) and increasing the revenue to Rs 60,000.

No one can dispute that all of these (or at least some of these) are feasible which can give the farmer the desired result, though all these won’t happen by themselves. Each of these could mean different policy options for the Government, like increasing MSP, making available cold storage facilities on a rental basis, providing inputs at a lower cost, providing access to technology on credit basis, etc.

All of these require a lot of planning by the Central Government, close coordination with the states and good execution by the states with the active involvement of the farmers. Such growth can be accomplished with just 15% to 35% growth of agriculture sector (depending on the policy options) in 5 years; this would mean 3% to 6% Year over Year CAGR of the agriculture sector.

To accomplish any or all of these, we would need more modernization, cost savings (like drip irrigation), making available better quality inputs (like irrigation facilities), better remuneration for agricultural produce (like higher MSP, cold storage on rental basis for selling at the best time and price), more widespread crop insurance, etc.

The Central and State Governments need to sit together, plan, communicate to the farmers and execute.

On a different but related note, as long as the political parties are in election mode all through the 5-year term, the Centre and the States working so closely together in a cooperative mode may not happen because of competitive politics. Hence, it makes sense to have common elections to the Centre and the states once in 5 years, or at least once in 2-3 years. Even otherwise, the political parties should work together in the national interest and make it happen.

An Engineer-entrepreneur and Africa Business Consultant, Ganesan has many suggestions for the Government and sees the need for the Govt to tap the ideas of its people to perform to its potential.
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3 COMMENTS

    • What is socialist about this article? I don’t understand. Incidentally, the most developed capitalist countries protect their agriculturists, FYI.

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