Govt sets up panel to lay out plan for doubling farm incomes

New Delhi: The central government has set up a panel to suggest ways to double farm incomes by 2022, as promised by Prime Minister Narendra Modi.

The task of the inter-ministerial committee will prepare a blueprint to transition farm policies from being production oriented to based on incomes or value addition.

The committee will look into ways to examine the potential of Indian agriculture and where investments are required, and will identify segments with potential for growth, said an official with the agriculture ministry aware of the development, on condition of anonymity.

He added that the guiding principle for the committee would be to diversify risks in farming and chalk out ways in which integrated farming—foodgrains, horticulture and allied activities like livestock and fisheries—can boost farm incomes.

“The goal to double incomes is a good dream of the prime minister but the task is herculean... to begin with the government needs to decide whether they are talking about real or nominal incomes,” said Ashok Gulati, agriculture chair professor at the Delhi-based Indian Council for Research in International Economic Relations.

“If the goal is to double nominal incomes the (previous) United Progressive Alliance government did it in five years between 2009-10 to 2013-14. Doubling real incomes by 2022 will require the farm sector to grow at an annual rate of 10%, compared to a growth rate of less than 0.5% in the last two years,” Gulati said.

The inter-ministerial committee, which is expected to submit its recommendations in two months, will be headed by Ashok Dalwai, additional secretary at the agriculture ministry, and will have officials from the marketing, crops and horticulture divisions of the ministry as members.

The other members are officials from the food processing ministry and experts from the Delhi-based National Council of Applied Economic Research and National Institute of Agricultural Economics and Policy Research.

“The centre is trying to address the unpredictability in agriculture due to market or price fluctuations, and due to weather,” said the agriculture ministry official cited earlier. “We have already taken important steps like setting up an electronic National Agriculture Market and rolling out a new crop insurance scheme.”

He further said the focus will not be limited to enhancing productivity but also include reducing costs of cultivation through judicious use of fertilizers and increasing access to irrigation.

The central government’s decision to set up the committee follows the budget announcement that set a goal of doubling farm incomes by 2022.

Prime Minister Modi also suggested a seven-point strategy to double farm incomes while speaking at the Bloomberg India Economic Forum last month.

The focus areas, according to Modi, could be large investments in irrigation, quality seeds, soil health, cold chain and warehousing to prevent losses, value addition through food processing, creation of a pan-India national market for farm produce, and risk mitigation through crop insurance and diversifying into areas like poultry, bee keeping and fisheries.

The National Democratic Alliance government is trying to revive agricultural growth and income, following back-to-back deficit monsoons in 2014 and 2015.

While agriculture growth contracted by 0.2% in 2014-15 from 4.2% in the previous year, farm incomes also took a hit because of lower production and a drop in prices of key crops such as rice, wheat and cotton.

As many as eleven states declared a drought in 2015, highlighting the critical role of the monsoon for Indian agriculture and rural demand.

To address ongoing farm distress, the Union budget in February increased allocation for crop insurance and irrigation schemes.

Last week, the centre launched an electronic National Agriculture Market, or e-NAM, that will connect 21 mandis from eight states in the first phase. The centre aims to bring 585 mandis across India on to the platform by March 2018.

The Economic Survey released in February said the average annual income of the median farmer, net of production costs, from cultivation is less than Rs.20,000 in 17 states.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.