‘Avg farm income soars 1.3-1.7 times in FY22 from FY18’

MUMBAI: The income of farmers has grown in the range of 1.3-1.7 times in FY22 from the FY18 levels on average while grain exports soared to over $50 billion, says an SBI Research report.

For certain crops in some states (like soyabean in Maharashtra and cotton in Karnataka) farmers’ income more than doubled in FY22 from FY18 levels, while in all other cases it rose in the range of 1.31.7 times.

The increase in the income of farmers engaged in cash crops has been more prominent compared to farmers growing noncash crops, SBI chief economist Soumyakanti Ghosh said in an elaborate report on Sunday.

This also has led to an increase in the share of agriculture in the GDP to 18.8 per cent from 14.2 per cent, the report said. This rise was also due to the shrinkage of the industrial and services contribution to the economy due to the deadly second wave of the pandemic.

But the report is silent on the massive fall in the prices of spices like black pepper, cardamom, clove, and cinnamon among others as also natural rubber.

Also, the report, based on key farming states like Maharashtra, Rajasthan, MP, UP, Karnataka, and Gujarat among others, notes that allied/nonfarm income showed a significant increase of 1.4-1.8 times in the majority of states in tandem with farm income during this period, substantiating the trend in the 77th National Sample Survey that said source of farmers income has become increasingly diverse apart from crops.

Significantly, this also ensured that there have been no yawning gaps in income inequalities in the hinterland during this period.

The report also urges the government to launch a livelihood credit card by targeting at least 1 million farmers every year and an omnibus credit guarantee fund for a Rs 5 lakh crore agri credit push.

The agrarian economy has undergone some tectonic shifts of late, emerging as the anchor for the broader economy during the tumultuous days of the pandemic, says the report, adding while the economy contracted the highest at 6.7 per cent in FY21, the farm sector grew and the trend continued in FY22 too. This has, in turn, led to a higher share of agriculture in the country’s GDP since March 2019.

Similarly, agri exports zoomed upwards of $50 billion in FY22.

Apart from enabling policy push, the report also attributes the growth to the changes in the eating habits and nutritional focus buoyed by shifting socioeconomic and cultural patterns, thereby ensuring upgrades/rotation in cropping patterns across the country even as food security becomes central to a growing population imbibing varied demographics.

Another growth driver was the steady increase in the minimum support prices (MSPs), which are increasingly aligned with market-linked prices.

Since, 2014, MSPs have increased by 1.5-2.3 times, playing a pivotal role in ensuring better prices for farmers and leading to optimal price discovery. This has also encouraged farmers to gradually move over to crop varieties that have better yield/value.

However, despite the much hype and political patronage, farm loan waivers by states have failed to bring respite to intended subjects, sabotaging credit discipline in select geographies and making banks/ financial institutions wary of further lending.

Between 2014 and March 2022, of the 3.7 crore eligible farmers, only about 50 per cent of them received the amount of loan waiver though in some states more than 90 per cent of farmers received the debt waiver amount.

The kisan credit card (KCC) scheme has another instrument which helped bring in a large number of farmers under the ambit of a formal credit mechanism at a subsidised interest rate.