Farm income security

Law won't help; find market-based solutions

The farmers’ demand at the pre-Budget consultations with Finance Minister Arun Jaitley for an income security law, even though impractical like the concept of universal basic income, needs to be viewed in the perspective of economic distress in rural areas. As pointed out by the Consortium of Indian Farmers Association, the median agricultural income of Rs 1,600 a month is insufficient to sustain a farm household. The National Sample Survey Organisation (NSSO) data for 2012-13 (70th round) had revealed that nearly two out of three farm families were unable to earn enough to meet the household expenses. Besides, a recent discussion paper of the NITI Aayog has revealed that about two-thirds of rural income now come from non-agricultural sources. Nearly 80 per cent farmers are not covered under the minimum support prices mechanism. Many of them do not even recover their production costs. The need for farmers to earn a reasonable living cannot be disputed.

But that cannot be guaranteed through a law, especially in the case of an innately hazardous occupation like agriculture. Even insurance, a time-tested tool to hedge risks, has not been wholly effective in farming. The earlier National Democratic Alliance (NDA) government of Atal Bihari Vajpayee had in 2002-03 brought in a scheme to cover both production and price (read income) risks of the farmers. But it remained a nonstarter and had to be abandoned.

Income generation is an economic issue that requires market-based solutions. The National Commission on Farmers, headed by noted farm expert MS Swaminathan, had recommended that agricultural growth should be measured in terms of rise in farm income rather than increase in production. The obvious objective of this recommendation was to keep farm income in constant focus so as to help evolve income-centric policies. However, this counsel had remained unheeded when it was mooted in 2006. Now that the widespread unrest in rural areas has begun to show up in the form of Kisan agitations, the issue of income has come back into contention, forcing the government to set a target of doubling the farmers’ income by 2022. This goal is, however, hard to achieve without structural reforms in the farm sector. The seven-point action plan being implemented by the government to boost farm incomes does not lay adequate emphasis on much-needed reforms in areas like input pricing, marketing output, managing land (ownership and leasing), and importing and exporting farm goods.

In this regard, some of the suggestions made at the pre-Budget meeting merit attention. These include scrapping the outmoded Essential Commodities Act, which allows the government to put curbs on the movement and stockholding of farm products and frequently change the import and export duties. Another sane suggestion is to link domestic prices with Customs tariffs so that imports do not become cheaper than the local produce. This is needed to restore the profitability of farming and let production respond to market demand. Also needed are avenues of generating additional income and employment in both farm and non-farm rural sectors. This can be done by encouraging integrated farming involving agriculture’s allied activities, such as horticulture, floriculture, herbal farming, agro-forestry, beekeeping, poultry, piggery, fisheries, and similar others. Besides, the agro-based industry needs to come up in and around rural areas to provide more opportunities for employment and income for cash-starved farmers.