As Modi plans doubling farmers’ income, here’s reality check; farming not profitable for nearly 20 years

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Updated: July 10, 2018 12:03:30 PM

Even as the Centre talks about doubling the income of farmers by 2022, farming in India has remained largely unproductive for nearly 20 years despite a host of reforms seeing the light of the day.

The gross farm revenue fell 6 percent per year between 2014 and 2016 period.

Even as the Centre talks about doubling income of farmers by 2022, farming in India has remained largely unproductive for nearly 20 years despite a host of reforms seeing the light of the day. A new OECD-ICRIER report suggests the government should launch fresh policy initiatives and accelerate existing reforms so that the income of farmers improves and agriculture growth gets much needed push. Even as farmers received large subsidies for various inputs like fertilisers, power and irrigation, the gross farm revenues fell 14 percent on average between 2000 and 2016.

The gross farm revenue fell 6 percent per year between 2014 and 2016 period because of low market prices, the report ‘Agriculture Policies in India’ states.

“Farmers in India face complex domestic market regulations and import and export trade restrictions, which together often lead to producer prices that are below comparable international market levels,” the Organisation for Economic Co-operation and Development (OECD) and the Indian Council for Research on International Economic Relations (ICRIER) said. India is only one of three countries (of the 26 tracked) where farmer income has remained in the unproductive range for nearly two decades, according to the study.

The study suggests that the input subsidies provided through the budget should be freezed and then gradually withdrawn. This fund should rather be used for providing general services like infrastructure and innovation in the sector. They suggested to the government to encourage the private sector in the domestic agri-market regulations.

Recommending series of reforms, the report said the government should not resort to export curbs for creating stable and predictable market environment. The government should reduce tariffs and other restrictions on imports, it said, adding that even food subsidies should be either targeted lump-sum transfers (DBT) or a food stamp type of mechanism.

The report also highlights both the notable progress made by the country’s agricultural sector over the past two decades and the important challenges now confronting the sector: declining but still persistent food insecurity and nutrition deficiencies, large numbers of small and resource poor farms, increasing water scarcity, low productivity growth and the uncertain impacts of climate change. It highlights the opportunity for policymakers to rebalance their efforts away from complex, volatile and often competing market interventions in favour of measures that target the nutrition needs of the poor and the productive possibilities of farmers and rural residents.

“Many of the policy recommendations in the report are well known to the Indian government, and action on some are already underway,” said Ken Ash, OECD Director for Trade and Agriculture. “But more can and should be done, and we look forward to continuing to work with India, and to support its efforts to improve outcomes for consumers and farmers alike,” he added.

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