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Decelerating Farmers’ Incomes
Caught in the “Hindu rate of growth,” farmers’ income growth decelerated in recent years. It is possible to break free of this by implementing policy correctives—reducing anti-agriculture bias, promoting livestock and labour-intensive rural manufacturing, liberalising agricultural output markets, and spurring investments.
The authors thank the anonymous reviewer for useful suggestions. The usual disclaimer applies.
Renewed scholarly debate on the level and growth of farmers’ income in India since the beginning of the new millennium follows failed experiences for more than a half-century with varied development theories starting from the two-sector model of Arthur Lewis. Although the growth in overall per capita income in the economy broke free of the “Hindu rate of growth” during the last two decades, farmers’ incomes languish at the “low-income,” “low-growth” trap exacerbating the rural–urban divide. Recent studies focused on these issues and endeavoured to come up with solutions to accelerate the same (Chand et al 2015; Chandrasekhar and Mehrotra 2016). The solutions included a wide range of policy measures, from comprehensive solutions in a food system approach with nutrition sensitivity (Dev 2023) and labour-intensive rural manufacturing (Chand et al 2017), to structural reforms (Gulati et al 2020). This article examines the recent evidence from government data sources and discusses ways forward, drawing from the extant literature.
Although the production of foodgrains and horticultural crops has been continuously increasing in India, it is not reflected in the income of farmers. The report of the Situation Assessment of Agricultural Households and Land and Holdings of Households in Rural India 2019 released by the National Statistical Office in September 2021 yet again reveals a pathetic income level of Indian farmers (NSSO-SAS 2021). The average monthly income from different sources per agricultural household from July 2018 to June 2019 comes to only `10,218 (in nominal prices) where the net receipt is obtained considering the “paid-out expenses” approach. The amount of income further reduces to `8,337 when net receipt is obtained considering both the paid-out and imputed expenses. This means that the average per day income of agricultural households is only about `277, which is not much different from the minimum wage rate paid under the
Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005. Can the farmers meet the minimum requirements of their family with this meagre income? Why is the farm income pathetically low? Are there significant differences in farm income across states? Let us decode it in this article.
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