Post on 15-Jan-2017
IFPRI Panel Discussion on Evidence based Policy for Growth of Indian Farm Income
Doubling Farm Income : Policies and Strategies
Raka Saxena, Senior Scientist
ICAR-National Institute of Agricultural Economics and Policy Research
New Delhi
• Agricultural sector received continuous attention of the policy makers and stakeholders.
– A number of initiative were undertaken to improve the performance of this sector.
• For the first time in our history, Hon’ble Prime Minister of India exhorted to “Double the Farmers’ Income” by 2021-22 and helped in channelizing the efforts in the unified direction.
• A holistic approach is being followed from top to bottom in an integrated manner and the slogan is catching the momentum and attention of one and all.
• DFI goal was also coupled with many new and well-thought out schemes
– Pradhan Mantri Fasal Bima Yojana
– e-National Agricultural Market
– Paramparagat Krishi Vikas Yojana
– Pradhan Mantri Krishi Sichai Yojana.
Which income to be doubled? Farm income or farmers’ income
Whether nominal or real?
Which dimension needs to be considered? Gross farm income Per cultivator income Per household income
What would be the timeframe? From 2016-17 to 2021-22 (Six years)
• DFI Mission, requires accurate information on certain indicators which reflect the farmers’ income and welfare.
– The most appropriate measure of farmers’ well-being is the level of farm income.
• A few attempts made by some scholars to prepare estimates of farm income in the past based either on a sample of farmers or a particular segment of agriculture.
• Various methodologies and estimates of farmers’ income are available only on point basis.
• The studies largely referred to the growth in agricultural output (VOP/AgGDP/GSDP), output and input price behaviour along with price spread, rise in wages, rising indebtedness, to indicate the given state of Indian framing.
• Chand et al (2015) provided series of farm income based on NSSO data.
Farm business income from CACP data
Aggregate and disaggregate farm income using CSO and NSSO data
Income purely on the basis of Situation Assessment Survey of NSSO
Year Per Cultivator Per Hectare NSA
Per
Holding
Wage Earning Per
Labourer
Real Income
1983-84 16103 14798 22603 5513
1987-88 17030 16770 22298 6630
1993-94 21110 21345 27147 8168
1999-00 26875 26437 31325 9931
2004-05 26146 30755 34103 10043
2011-12 42781 44176 44688 17662
Income at Current Prices
2011-12 78264 80817 81753 32311
Period Total Per Cultivator Per Holding Per Hectare of NSA
1983-84 to 1993-94 3.67 2.74 1.85 3.73
1993-94 to 2004-05 3.30 1.96 2.10 3.38
2004-05 to 2011-12 5.36 7.29 3.94 5.31
Source: Ramesh Chand, Raka Saxena and Simmi Rana
Year
Farm income
per
cultivator
(Rs) F
Wage earning
per agricultural
labour (Rs) L
Income per
non
agriculture
worker (Rs) N Ratio L:F Ratio N:F
1983-84 4286 1467 12786 0.34 2.98
1987-88 5653 2201 18036 0.39 3.19
1993-94 12365 4784 37763 0.39 3.05
1999-00 24188 8938 78565 0.37 3.25
2004-05 26146 10043 106688 0.38 4.08
2011-12 78264 32311 246514 0.41 3.15
Source: Ramesh Chand, Raka Saxena and Simmi Rana
Disparities in Agriculture and Non-Agriculture Income
1.96
7.29
10720
18241
13754
0
1
2
3
4
5
6
7
8
10000
11000
12000
13000
14000
15000
16000
17000
18000
19000
Gro
wth
in p
er
cult
ivat
or
inco
me
Nu
mb
er
of
suic
ide
s
Growth rate in farm income per cultivator Farmers' Suicide
Growth during 2004-05 to 2011-12
Growth during 1993-94 to 2004-05
Trend in Farmers’ Suicides and Growth in Farm Income before and after 2004
Source: Ramesh Chand, Raka Saxena and Simmi Rana
All India Farmers’ Income
Wages, 2071, 32%
Cultivation, 3081, 48%
Farming of Animal, 763, 12%
Non-Farm Business, 512, 8%
All India Average Income per year per household: Rs 77112
Farm Households’ Income: Major Sources Category I States
Punjab 18059
Haryana 14434
Jammu & Kashmir 12683
Kerala 11888
Arunachal Pradesh 10869
Karnataka 8832
Himachal Pradesh 8777
Category II States
Gujarat 7926
Maharashtra 7386
Rajasthan 7350
Tamil Nadu 6980
Telangana 6311
Madhya Pradesh 6210
Andhra Pradesh 5979
Category III States
Chhattisgarh 5177
Odisha 4976
Uttar Pradesh 4923
Jharkhand 4721
Uttarakhand 4701
West Bengal 3980
Bihar 3558
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
PB HR JK KE ARP KR HP
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
GJ MH RJ TN TL MP AP
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
CG OD UP JH UT WB BH
• A Committee has been constituted under the chairmanship of Dr. Ashok Dalwai, Additional Secretary, Department of Agriculture, Cooperation and Farmers’ Welfare, Ministry of Agriculture and Farmers’ Welfare for institutionalization of the effort.
Committee for Standardization of Methodology for Estimating Farmers’ Income
• The National Institute of Agricultural Economics and Policy Research of Indian Council of
Agricultural Research has been entrusted with the task of finalizing and publishing the estimates of farmers’ income at all India and state level.
Dr. Suresh Pal Member, CACP
Member
Dr. S. K. Mukherjee, Adviser DES
Member
Dr. Raka Saxena, Senior Scientist, ICAR-NIAP
Member-Convener
1. The first and foremost indicator reflecting the farmers’ welfare may be the Net
State Domestic Product (NSDP) from agriculture of the country/states.
2. The NSDP agriculture and allied consists of NSDP from crops, livestock,
fisheries and forestry sub-sectors. As entire output from forestry will not be
directly accrued to the farming community, it was proposed that the NSDP
forestry may be adjusted by a certain fraction which indicates the share of
farm forestry in NSDP forestry
3. Three approaches for estimation of farmers/household income were decided
1. Estimating the household agricultural income after deducting the paid-out cost of hired labour. This is equivalent to returns to family labour and fixed factors of production, i.e. land.
2. Estimating Net farm Income from Agriculture by deducting the paid-out labour cost, imputed value of family labour and rental value of land.
3. As farmers derive a certain proportion of income from non-farm sources, it would be worthwhile to consider the non-farm income of agricultural households and thus, total household income (farm and non-farm) may be computed.
4. There is need to include certain indicators which reflect welfare of agricultural labour. Few indicators were decided as:
1. Nature (regular, casual)
2. Labour employment in different sectors and sub-sectors
3. Wages/wage earnings across different sectors
• Gross income doubled from 2015-16 to 2021-22
• Based on the assumption that there is no growth in CPIAL
570285
1140571
0
200000
400000
600000
800000
1000000
1200000
1983/84 1987-88 1993-94 1999-00 2004-05 2009-10 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22
Desired growth in farm income: 12.25 per cent per year during 2016-17 to 2021-22
• Based on the assumption that – inflation (CPIAL) grows at the recent growth during (2011-12 to 2015-16) i.e. 10.48 per
cent (A different CPIAL reported in NAS, which indicates approximately 9.40 per cent) – Share of wage bill remains the same
0
100
200
300
400
500
600
0
500000
1000000
1500000
2000000
2500000
3000000
3500000
4000000
4500000Net value added (Rs crore)
Real farm income projected with 10.48 per cent growth in CPIAL
CPIAL (Base 20004-05)
Growth in NVA: 11.22 per cent per year during 2011/12 to 2014/15 Growth in CPIAL: 10.48 per cent per year during 2011/12 to 2015/16
Growth in real farm income: 0.67 per cent per year during 2016/17 to 2021/22
• Real income projected assuming the recent growth in CPIAL i.e. 10.48 per cent
• Cultivator and holding growth during 2004-05 to 2011-12 taken to project the number of cultivators (-1.80 per cent) and holdings (1.36 per cent). NSA assumed to be constant
14
79
8
42
93
1
40
27
4
44
66
0
16
10
3
41
57
5
41
94
3
51
86
9
22
60
3
43
42
9
38
59
1
39
45
1
0
20000
40000
60000
80000
100000
120000
140000Per unit of NSA
Per cultivator
Per holding
Growth in income per unit of NSA: 0.67 Growth in income per cultivator: 2.52 Growth in income per holding: -0.68
• Current growth in number of cultivators: -1.80 per cent
• Let us assume this growth as -5 per cent per year for six years – This implies transformation of agricultural units/holdings into one agricultural enterprise
• Let us examine the impact on per cultivator income
72234
41575
51864
0
10000
20000
30000
40000
50000
60000
70000
80000Per cultivator income with cultivator growth @ -5 per cent
Per cultivator income with cultivator growth @ -1.80 per cent
5 per cent decline in cultivators per year for six years leads to more than 50 per cent increase in per cultivator income.
-15
-10
-5
0
5
10
15
20
19
81
-82
19
82
-83
19
83
-84
19
84
-85
19
85
-86
19
86
-87
19
87
-88
19
88
-89
19
89
-90
19
90
-91
19
91
-92
19
92
-93
19
93
-94
19
94
-95
19
95
-96
19
96
-97
19
97
-98
19
98
-99
19
99
-00
20
00
-01
20
01
-02
20
02
-03
20
03
-04
20
04
-05
20
05
-06
20
06
-07
20
07
-08
20
08
-09
20
09
-10
20
10
-11
20
11
-12
20
12
-13
20
13
-14
20
14
-15
Crop LivestockFisheries Total ag incl fisheries
1. Base data: Value of production @ 2004-05 prices (From 1980-81 to 2013-14)
2. HP Filter used to separate the trend and cyclical components in the time series
3. Trend growth rates during 2004-05 to 2013-14 computed based on smooth series obtained using HP Filter
4. The growth, thus obtained, used to make projections for 2014-15 to 2021-22
Three growth scenarios assumed for 2014-15 to 2021-22
1. Business as Usual: The growth obtained for projected series (based on smoothened series using HP Filter)
2. Optimistic Scenario: For Potential Growth, year-on-year growth computed during 2004-05 to 2013-14. The best growth obtained during the decade considered as potential growth. Due care was taken not to select highest growth in recovery period from a bad year.
3. Pessimistic Scenario: The lowest growth obtained during the decade was considered here.
Actual and Potential Growth Scenario across Sub-sectors
Categories/ Sub-Sectors
Current Growth (2004-05 to 2014-15)
Projected Growth
(2015-16 to 2021-22)
Business as Usual Optimistic Scenario Best Scenario
Cereals 2.4 2.0 6.3 7.9
Pulses 2.6 2.2 14.4 18.0
Oilseeds 1.4 2.1 18.5 23.1
Sugar 2.7 2.0 13.8 17.2
Fibers 5.3 6.0 19.7 24.6
Drugs & Narcotics 4.8 4.3 12.8 16.0
Spices & Condiments 5.6 5.1 9.6 12.0
Fruits & Vegetables 4.9 4.3 6.1 7.7
All Crops 3.1 2.9 7.8 9.8
Livestock 4.9 4.6 5.2 6.4
Fisheries 3.6 3.2 5.8 7.2
Overall 3.6 3.3 6.9 8.6
Sub-Sector Contribution to
Potential Growth of 8.6%
Livestock 1.84
Horticulture 1.74
Cereals 1.53
Oilseeds 1.44
Fruits & Vegetables 1.43
Fibers 0.83
Sugar 0.71
Pulses 0.51
Fisheries 0.38
Condiments & Spices 0.31
Drugs & Narcotics 0.22
Others 0.04
Livestock 17%
Horticulture 16%
Cereals 14%
Oilseeds 13%
Fruits & Vegetables
13%
Fibers 8%
Sugar 6%
Pulses 5%
Fisheries 3%
Condiments & Spices
3%
Drugs & Narcotics
2%
Others 0%
Scenario Assumption Incremental Charges
(Rs. Crore)
Contribution to
Growth (% to VOP
Ag. & Allied)
Scenario I 2.50 per cent growth in TFP 184023 20
Scenario II 3.00 per cent growth in TFP 220828 24
Scenario III 3.50 per cent growth in TFP 257633 28
Scenario Assumption Incremental
Changes (Rs crore)
Contribution to
Growth (%)
Scenario I Bringing 15 per cent potential area
under micro-irrigation
38985 4.2
Scenario II Bringing 30 per cent potential area
under micro-irrigation
77970 8.5
Scenario III Bringing 45 per cent potential area
under micro-irrigation
116955 12.7
15
24
5
30
48
9
45
73
4
1.7
3.3
5.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
Addressing 25 per cent ofyield gap
Addressing 50 per cent ofyield gap
Addressing 75 per cent ofyield gap
Scenario I Scenario II Scenario III
Co
ntr
ibu
tio
n t
o G
row
th (
%)
Incr
emen
tal C
har
ges
(Rs.
Cro
re)
Incremental changes (Rs crore) Contribution to growth (%)
Scenario Assumption Incremental
Changes (Rs crore)
Contribution to
Growth (%)
Scenario I Shifting 5 per cent cereal area to horticulture 27026 2.9
Scenario II Shifting 10 per cent cereal area to horticulture 54052 5.9
Scenario III Shifting 15 per cent cereal area to horticulture 81078 8.8
45163 62403
41575 41941 51864
0
20000
40000
60000
80000
Per cultivator income with cultivator growth @ -3.6 per cent
Per cultivator income with cultivator growth @ -1.80 per cent
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
0
5000
10000
15000
20000
25000
30000
35000
Reducing post-harvest lossesby 20 per cent
Reducing post-harvest lossesby 35 per cent
Reducing post-harvest lossesby 50 per cent
Scenario I Scenario II Scenario III
Co
ntr
ibu
tio
n t
o g
row
th (
%)
Incr
em
enta
l ch
ange
s (R
s cr
ore
) Incremental changes (Rs crore)Contribution to growth (%)
A. Movement in CPI and WPI B. Gains from better price realization
Better Price Realization Scenario Increase in price
realization by farmers through domestic market and trade
Incremental changes
(Rs crore)
Contribution to growth
(%)
Scenario I Up to 15 per cent 138018 15
Scenario II Up to 30 per cent 276035 30
Scenario III Up to 60 per cent 414053 45
0
50
100
150
200
250
300
WPI AG
CPIAL
Non-farm sources of Growth
• Improved value addition and processing • Reducing dependence on agriculture • Review of current programmes and schemes
– ACABC – MIS
• Governance related – Linkages among high powered think tanks – Prioritization of research areas for investment – Making the farmers party to the mission – Centre-state linkages – Consensus among stakeholders
1. Finalizing the Growth Scenario for entire agricultural sector and sub-sectors
2. Identification of potential sources of growth across sub-sectors
3. Consensus among stakeholders to promise and deliver the targeted growth
4. Formulating Strategic Framework for Achieving the Targeted Growth in Different Sub-sectors.
5. A Core Committee to observe and monitor the performance of Strategic Groups. The Committee will act as Think Tank and linkage between the Planners/Planning Unit and Actors/Implementing Units and provide quarterly feedback /review of the implementation.
6. Annual Progress to be reviewed in every March to examine the current year growth and revisit the targets for the next year
• Prioritizing the areas for investment
• Identifying and prioritizing the constraints (biotic/abiotic/ environment/marketing related) based on the potential to contribute to the targeted growth
• Preparing schematic plan and possible interventions to address the constraints
• Breaking the strategies and plans for maximizing the revenues and at the same time minimizing the losses
• Identifying the mode of intervention through public, private or participatory approach
• Integration among different Ministries and Departments for proper surveillance and monitoring
….LET’S WORK FOR FULFILLING THE DREAM OF DOUBLING FARMERS’ INCOME
THANK YOU!!