Farm incomes, at its current levels, can no longer provide for the most basic needs of rural families

For the farmers Union Budget is confusions galore heres whyImage: CC by 2.0 Flickr/mckaysavage
news Agriculture Friday, March 11, 2016 - 10:20

By Dr Raghu P

The Union Budget for 2016 was presented to the people of the country in a context of extreme rural distress and deprivation.  It took place in the backdrop of one of the worst drought that the country’s farm lands are faced with in recent decades. It is also an extension of a disconcerting account where, since 1995, over 300,000 farmers were forced into committing suicides and several thousands more are probably on the verge of it. Average income of over a majority of India’s farm households are less than Rs. 5000 and 52% of families who are dependent on agriculture, are in debt. Over 50% of the farm households are dependent on private money lenders who lend at exorbitant rates and that debt piles up by the month.

Farm incomes, at its current levels, can no longer provide for the most basic needs of rural families. Over 37 million farmers turned into farm labourers between 2001 and 2011, according to the latest Census data. Minimum support price offered to most crops are less than what it actually costs a farm family to produce it. Wage work, whether under MNREGA or other casual labour, isn’t easily available or aren’t managed efficiently.

Over 600 million people, who are dependent on agriculture and allied activities, are on the verge of a distress-induced migration, into cities and its mofussils, in search of a job. We still haven’t discovered any industry or technology that can employ such large numbers of people and probably never will. It is leading to massive levels of migration, despicable conditions of living for this country’s poorest.

Therefore the responsibility of any government, irrespective of which party they belong to, is to make farming viable - so that it can first provide for local and domestic food security needs, arrest rural to urban migration, while also helping the farm families earn a decent living income. It is a humungous task and cannot be solved by any magic wand, whatsoever. It is in this context that we must look at the current Union Budget and what it promises to do. Here are three questions, that linger on mind as I set out to analyse the budget. 

Is the increase in allocation really an increase?

At one level, it is encouraging that the dispossession and deprivation of the country side has found attention in the most important budgeting exercise. What amuses is the lack of commitment in “real” allocations. It is definitely an increased allocation when compared with the just previous year. But let us first remember that in 2014-15, there was a massive dip in budget allocation to agriculture from Rs. 31,602 crores to Rs. 24909 crores. In 2016-17 the total allocation to agriculture and farmers welfare stands at Rs. 35,984 crores. However, if we deduct the new addition of 15,000 crores (interest subvention) from this, it is less than that of 2014-15. So is it actually an increase? 

Agricultural research in India continues to be under-funded. (Refer table below). Livestock and fisheries are crucial to rural and coastal economies and they continue to be neglected, with insignificant increase:


Budget allocations




Department of Agriculture, cooperation, and farmers welfare




Department of agriculture research and education




Department of animal husbandry dairying and fisheries









Is doubling farm income realistic without increasing MSP?

There is also a promise and commitment to double farmer’s income. If one were to increase the nominal income by 100% in 5 years, it has to increase at the rate of nearly 15% every year, isn’t it? If you consider the level of distress and the stagnant pricing of agriculture produce, it looks almost impossible. Incomes for farmers can increase only if we help reduce the input cost, or increase the minimum support price. There is no clarity on either. Given the little focus on agricultural research and the extreme climatic conditions we are faced with, one fails to understand how any government could guarantee such rates of increase.  Where are the measures that could lead to such enhancements? We do not even have an income commission for farmers to ensure some concrete steps in this direction!

Is the allocation for irrigation and organic farming realistic?

The Union Budget also announces that 28,50,000 hectares will be irrigated with 86,500 crores over a period of 5 years. In reality, to irrigate each hectare, one needs to spend atleast Rs. 50,000 and in case of canal irrigation the amount is more than 2 lakhs per Ha. Even if we consider the minimum cost of 50000/-, to irrigate those declared tracts of land, we would need 14,00,000 crores, which is twenty times the current allocation!

The budget has also set aside Rs. 5500 crores for a comprehensive insurance scheme. Even if one were to assume there were ways to overcome the current, highly corrupted patwari system of damage assessment, this amount would cover relatively small section of farmers. When the PMFBY was announced a few months ago, there were estimates that it needs around 8000 to 9000 crores to meet the stipulated % of farmers i.e., 50% of farmers. In such case, the current allocation could cover hardly 20 to 25 % of the farmers only.  

There is also an emphasis on Organic farming. It is unclear if this is going to be an industry led model of organic farming, which has its own issues. However, even if one sets aside that suspicion, the target area of 500,000 hectares is too less for 3 years. In the absence of price assurance, you need to reduce the cost through promoting non chemical farming which is less expensive. But this needs a big push and allocations. The amount allocated is 297 crores barely suffice for any significant push. 

Now, keep aside all of this.

70% of our farm households are of small and marginal farmers who own (or have leased) less than 1 hectare of land.  I can’t remember any reference to this section of farmers in the speech or in the reports that came about after the budget. It is also important to note that the allocation on PDS, fertilisers has indeed come down – which raises serious questions about local food security and also in terms of reducing the input cost for the farm families. So what and who exactly are the priorities of these allocations?

To my mind, the government needs to come out with utmost clarity and a clear roadmap on the plans to increase incomes, ensure that inefficiencies in insurance systems are dealt with and also declare if it is opting for an industrial form of agriculture or a food sovereignty based system.

At this point, there is no clarity on any of these, apart from plain rhetoric.

All of us are waiting.


Dr. Raghu P leads the Land and Livelihood Hub at ActionAid India. He can be contacted at

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