With government policies, farmers’ debts shoot up while incomes wilt

It has been six years since the Union government made a pledge to double farmers’ income. And, it is six months since this fiscal began. But the promise is far from being delivered, going by the on-ground situation and even by official statistics.

“In 2016, the PM spoke of doubling farmers’ income by 2022-23. But now he says his gift to the country in its 75th year of Independence is doubling the amount of loans to peasants,” said Sardar VM Singh, a farmer leader from Uttar Pradesh, in his characteristic manner.

“Look at the figures. Before the present government assumed power, Budget 2013-14 assured agri-loans to the tune of Rs 7 lakh-crore. The amount in 2022-23 is Rs 18 lakh-crore,” he argued.

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Several questions have been raised in Parliament over doubling farmers’ income. Members have also sought names of states where it has been implemented. Every time the government’s reply mentions only the setting up of an inter-ministerial committee in April 2016.

This committee submitted the final report in September 2018, containing “strategy” for doubling of farmers income (DFI) “through various policies, reforms & programmes”. The government claims that as suggested by the DFI committee, it implements several developmental programmes, schemes, reforms and policies to augment the income of farmers directly or indirectly.

Since agriculture is a state subject, all the schemes and programmes are implemented in coordination with state governments. The Union government supports these schemes by providing higher budgetary allocation, non-budgetary financial resources, and by creating corpus funds.

Schemes exclude the very poor

“There are 86 per cent small farmers in the country who are not in a position to invest. It is important for us to improve the financial condition of these farmers,” stated Union Minister of Agriculture and Farmers Welfare Narendra Singh Tomar.

This is the section of farmers who cannot avail loans easily and neither have access to the market, claim activists. Farm unions say these tillers are forced to take loans from local moneylenders and sell their produce to the nearest trader who decides the price on his own. Loans keep accruing since their earnings are insufficient to make ends meet, forget repayment.

The budget allocation for the Agriculture Ministry has been increased to Rs 1,32,513.62 crore in 2022-23 and several schemes meant for farmers’ welfare have been introduced. But activists question the real benefits.

“Earlier, people spent almost half their income on food. Today, a major part goes towards health and education. And whatever price has increased, the benefit has not percolated to the producer,” complained Raju Shetti, founder of the Swabhimani Shetkari Sanghatana.

“There’s no government policy to support peasants in terms of their health, education, or insurance. The government talks about crop insurance. Ask the farmer seeking a reimbursement if he has been able to get anything,” he added.

Official records suggest that more than 7.6 crore farmer-applicants have received claims of over Rs 90,927 crore under the Pradhan Mantri Fasal Bima Yojana (PMFBY). 

The government’s flagship scheme, the Pradhan Mantri Kisan Samman Nidhi Yojana (PM-KISAN), does not cover tenant farmers. While they do the farming, it is the absentee landlords who allegedly walk away with the benefits of agri schemes. PM-KISAN provides an income support of Rs 6,000 per year, disbursed in three equal instalments. Ownership of a cultivable landholding remains the basic criteria to avail the benefit.

Further, unions claim that Kisan Credit Cards, offering production loans to dairy and fishery farmers besides agricultural crops, further add to indebtedness despite lower rates of interest.

Income rise is negligible

While farmers across the country continue to reel under increasing debt burden and estimates put out by the government’s own National Sample Survey Organisation (NSSO) show no substantial increase in what the peasantry earns from its agricultural activity, the Agriculture Minister claimed that “the income of the farmers is continuously improving; it has been seen that it has more than doubled”.

However, in April, NITI-Aayog member Ramesh Chand said the repeal of farm laws has come as a “setback”. Stressing that reforms are necessary for the agriculture sector, he claimed the repeal would hinder higher price realisation by cultivators. It could be a factor in achieving the goal of doubling farmers’ income by 2022, he added.

Tomar had made the claim of DFI being achieved while also quoting the latest NSSO data, which, as it happens, shows that the income of farmers had actually increased by just Rs 3,789 per month in the period between 2012-13 and 2018-19.

The statement was made by the minister in a reply to a series of questions asked by Congress MP Manish Tewari. Tewari, the MP from Anandpur Sahib constituency in Punjab, had asked “whether farmers’ income has doubled in the last six years” as declared by the government in 2016. He pointed out that the Centre-appointed committee had benchmarked the monthly income of farmers at Rs 8,059 in 2015-16 (the base year) and so, DFI after adjusting for inflation would stand at Rs 21,146 in 2022.

Also read: Agriculture Minister claims farmers’ income has doubled, then ties himself in knots

Shetti and Singh, along with some other farm leaders, are planning a three-day “MSP guarantee Kisan Morcha” in early October. They claim over 200 organisations from all parts of the country are expected to attend the convention to be held on the outskirts of north-west Delhi.

Several farmer leaders question the cost-calculation and allege that the input cost is well above what has been worked out by the government.

Various farmer organisations are seeking legalisation of MSP so that farmers are guaranteed returns from produce. At present, only a few crops are procured under MSP. Very few states have functional mandis or Agricultural Produce Market Committee (APMC) yards.

Crushing cost of farming

In 2006, the Bihar government, led by Chief Minister Nitish Kumar, abolished the APMC Act. It ended the mandi system in the state and introduced procurement through Primary Agriculture Credit Societies (PACS).

But Avinash Kumar, a farmer in Bihar’s Nawada district, insists he sells his produce to the local trader called lala or sahoo, who decides the price. He produces wheat and rice (the seasons alternate) over about seven acres of land.

“In a year, I manage to earn about Rs 2 to 2.25 lakh while my input costs are around Rs 80,000-90,000. Thus, I need to buttress my meagre income,” he said. Since he knows English, Japanese, and Chinese, he conducts symposiums for schoolchildren when he visits Delhi. That serves as his “buttress”.

However, things are worse this time with paddy acreage down due to poor rainfall. He could manage to sow rice for only about an acre. “There is hardly any profit… In order to earn a livelihood, you need to farm over 50-60 acres of land,” he said.

He explained that each bigha (about 1.6 bigha makes an acre) produces crops worth about Rs 8,000-10,000 per year. “If I have 10 bighas of land I can make about Rs 80,000 to Rs 1 lakh for which the input costs come around Rs 30-50,000. However, if you add labour the cost goes up. Say, if I add labour costs, it works around Rs. 60,000 for 200 days. It is Rs 300 per day,” he said. According to him, you do not need a calculator to count the money.

Despite the MSP for wheat for Rabi Marketing Season (RMS) 2020-21 being Rs 2,015 per quintal, he could make only between Rs 15,000-18,000. This year, eyeing the export market due to Russia’s invasion of Ukraine, private players picked up wheat directly from the producers.

Thus, Avinash could now sell wheat for Rs 2,000 per quintal – the highest ever for him – when MSP for RMS 2022-23 was hiked to Rs 2,015 per quintal.

Instead of selling to PACS, agents sometimes take crops to Punjab, even Karnataka. In fact, finding the mandis flooded, the Punjab government steps up vigil at its borders at procurement time. “Why can’t there be one nation, one market?” wondered Shetti, adding, “A legislation would ensure minimum price at every state, by every buyer – whether government or private.”

The erratic rainfall has added to input costs. “It costs 20/katha for water. That’s Rs 400 per bigha (1 hectare is approximately 4 bighas). And for paddy that has to be repeated 10 times. You can calculate the expenses,” said Avinash.

An educated, city-bred person like Avinash – who took up farming due to untoward incidents – is expected to be able to take care of his interests in rural India. But going by his travails, the plight of the common tiller can well be discerned. No wonder they fall into debt.

Rising insecurities

Government data show that the total loan amount between April 1, 2021, to March 31, 2022, was Rs 17.1 lakh-crore. In comparison, for 2017-18, the agriculture credit disbursed was Rs 11.6 lakh-crore.

In another statement, the minister put the average amount of outstanding loan per agricultural household in India at Rs 74,121. This amount went above six digits (lakhs) in eight states  – Andhra Pradesh (where average outstanding loan per agricultural household was Rs 2,45,554), Haryana (Rs 1,82,922), Karnataka (Rs 1,26,240), Kerala (Rs 2,42,482), Punjab (Rs 2,03,249), Rajasthan (Rs 1,13,865), Tamil Nadu (Rs 1,06,553), and Telangana (Rs 1,52,113).

The Union government has specified that it has not implemented any farm loan waiver scheme in the last five years. “Sometimes state governments announce farm loan waivers out of their own resources as per their own decisions, and beneficiaries’ data, etc., remains with the concerned state governments only,” it added.

The situation has worsened due to poor monsoons. Significant fall in paddy acreage has raised concerns over rice output. There is fear of prices spiralling in the kharif season.

Also Read: Drought fear in Gangetic plains: paddy sowing hit as rains play truant

In the case of price escalation, the government may release rice from the surplus said to have been procured in earlier kharif seasons. Last year, the country saw a record production of rice at 129 metric tonnes.  Reportedly, a bumper production and high procurement in the last few years resulted in a stock of 47 million tonnes of rice and paddy as on July 1.

Now, areas under paddy cultivation have fallen by about 15 per cent. The states where paddy acreage is reported to have suffered are Bihar, Jharkhand, West Bengal, Uttar Pradesh, Chhattisgarh, Madhya Pradesh, Odisha, and Telangana.

The Centre has called a meeting to review the status of rice procurement. The meeting will be held on August 30 with representatives of rice-producing states.