Income

Average farm income increases 1.3 to 1.7 times in FY22 compared to FY18: SBI Research

Farmer income increased in the range of 1.3 to 1.7 times in FY22 from FY18 levels on average, while grain exports soared to more than 50 billions of dollars, according to a report by SBI Research.

For some crops in some states (such as soybeans in Maharashtra and cotton in Karnataka), farmer income more than doubled in FY22 from FY18 levels, while in all the other cases, it increased in the order of 1.3 to 1.7 times.

The increase in income of farmers growing cash crops was greater than that of farmers growing non-cash crops,

chief economist Soumyakanti Ghosh said in a detailed report on Sunday.

It also led to an increase in agriculture’s share of GDP to 18.8% from 14.2%, according to the report. This increase is also due to the contraction of the contribution of industry and services to the economy due to the second deadly wave of the pandemic.

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

Further, the report, based on key agricultural states like Maharashtra, Rajasthan, MP, UP, Karnataka and Gujarat among others, notes that allied/non-farm incomes showed a significant increase of 1 .4 to 1.8 times in the majority of tandem states. with farm income over this period, confirming the trend of the 77th National Sample Survey that farmers’ source of income has become increasingly diversified outside of crops.

Significantly, it also ensured that there were no gaping gaps in income inequality in the hinterland during this period.

The report also urges the government to launch a livelihoods credit card targeting at least 1 million farmers every year and an omnibus credit guarantee fund for an agricultural credit boost of Rs 5 lakh crore.

The agrarian economy has undergone tectonic shifts in recent times, becoming the anchor of the wider economy during the tumultuous days of the pandemic, the report says, adding that while the economy has contracted at most high at 6.7% in FY21, the agricultural sector grew and the trend also continued in FY22. This, in turn, led to an increase in the share of l agriculture in the country’s GDP since March 2019.

Similarly, agricultural exports soared by $50 billion in FY22.

In addition to providing political momentum, the report also attributes growth to changes in dietary habits and nutritional orientation spurred by changing socio-economic and cultural patterns, thus ensuring upgrades/rotation of cropping patterns. across the country, even as food security becomes essential for growth. population imbibing varied demographics.

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

Since 2014, MSPs have grown 1.5 to 2.3 times, playing a pivotal role in securing better prices for farmers and leading to optimal price discovery. It has also encouraged farmers to gradually switch to crop varieties that have better yield/value.

However, despite the hype and political patronage, agricultural loan waivers by states have failed to bring respite to the subjects targeted, sabotaging credit discipline in some geographies and making banks/financial institutions wary of for new loans.

Between 2014 and March 2022, of the 3.7 crore eligible farmers, only about 50% of them received the amount of loan relief, although in some states more than 90% of farmers received the amount of debt relief.

The Kisan Credit Card (KCC) scheme has another instrument that has helped bring large numbers of farmers into a formal credit scheme at a subsidized interest rate.

There are 7.37 crore of active KCC, however, current regulatory standards allow renewal of KCC every year with full repayment of principal and interest, unlike other loans where interest service is sufficient for renewal.

Renewal of KCC loans with repayment of principal and interest only makes the farmer eligible for an interest subsidy and a 10% increase in the limit per year.

Since each review can take up to 45 minutes, juxtaposing it for 7.37 crore KCC implies that banks may have to spend 23 lakh cumulative man-days to complete this process every year which otherwise could have been used. for new agricultural loans.

Thus, some sweeping changes in this regard are needed, such as increased use of technology, such as making it app-based through digital channels to ensure fast review and renewal practices.

In addition, the government may consider launching a livelihood credit card encompassing a multi-purpose loan covering all activities of a rural household to facilitate KCC, targeting 1 million farmers to start by further invigorating rural demand or form a comprehensive omnibus credit guarantee fund. for agricultural and related sectors can act as a credit accelerator and provide coverage for all new agricultural loans.

This scheme alone, he says, can usher in additional agricultural credit of Rs 5.25 lakh crore with only an additional capital requirement of Rs 11,320 crore and minimum tax support of Rs 6,450 crore for the 5-year period. ending in 2027.

According to the assessment of the situation of agricultural households and land and livestock holdings in rural areas by the Office for National Statistics (ONS), the average monthly income of agricultural households increased by 59% to reach 10,218 rupees during the six years preceding the financial year 2019. PTI BEN MR MR