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Govt targets to raise average farm household income by FY23

Business Standard:  August 16, 2017

New Delhi: The average income of a farmer household estimated at ~96,703 in 2015-16 (at current prices) is targeted to rise, by government effort, to ~2,19,724 (at current prices) by 2022-23.

The figure has been estimated in an initial report of the official committee on doubling farmers’ income.

The benchmark income for the year 2015–16 at current prices has been arrived by applying the year-on-year state level net state domestic product growth rates at current prices on the derived income of agricultural households, using the NSSO 70th round database as the source. The all-India income for agriculture households using this method, the report said, comes to ~96,703.

The declared aim of doubling farmer household income by 2022-23 would need additional public and private investment of ~6.4 lakh crore, at current prices. The initial report details seven main factors in this regard. Better crop and livestock productivity are among these, as are better prices in real terms received by farmers. The first four volumes of the 14-part report were made public on Monday.

The targeted 127 per cent increase in income will lead to the share of farm income in total farmer household income rising from 60.2 per cent in 201516 to 69.2 per cent in 2022-23. At constant prices, the average income of a farmer household is targeted to be increased to ~1,56,154, from ~96,703. Income Targeted farmers’ income in base and terminal year 2015-16 (Base year) 2022-23 (Terminal year)* 2022-23 (Terminal year)** 1,52,031 at current prices is calculated by assuming an average yearly inflation rate of five per cent.

The committee on doubling farmers’ income is headed by Ashok Dalwai, chief executive of the National Rainfed Area Authority. The income estimates are of the panel.

In total income, 69 per cent would come from core farm activities. For the targeted 10.4 per cent annual increase in farmers’ income from 2015-16 to (~) 2022-23, the draft report said an additional private investment of ~1,31,840 crore is required at 2011-12 prices, besides public investment of ~5,08,080 crore.

This requirement for private investment varies across states, from ~126 crore to ~14,665 crore. That of public investment varies from ~400 crore to ~94,600 crore. The report says public investment is below the national average in Assam, Kerala, Uttar Pradesh, Madhya Pradesh, Bihar, West Bengal, Tamil Nadu, Rajasthan, Punjab and Odisha.

The estimated needed increase in weighted public investment — together in agriculture, irrigation, rural roads and transport, and rural energy — is pegged at 14.17 per cent annually. The committee strongly recommends stepping up of institutional credit on a large scale. Only 50-60 per cent of the investment requirements of farmers are being met through institutional loans.

It cautions that an income support system isn’t a long-term solution for tackling farmer distress, particularly in the backdrop of depleting natural resources and uncertainty caused by climate change, as also the dependence of a huge labour force on the farm economy. On developing of marketing infrastructure, it says all states must adopt the model Agricultural Produce Marketing Committee Act drafted by the Centre. The agriculture ministry must discuss this with states to make it operational. Also, that about 10,000 wholesale and 20,000 rural retail markets are needed to achieve the desired market density and network these into a pan-India system.

It also said a key aspect of doubling farmers’ income is to focus on export. The aim should be to raise agricultural export by a minimum of three times by 2022-23, to reach $100 billion (~6.4 lakh crore). And, go beyond cereals and meat, at present the bulk of our export. All of which require a stable duty structure, for import, too.

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