Tag Archives: MSP

REAL SITUATION OF AGRI-HOUSEHOLDS IN INDIA

The 70th Round of NSSO, for only the second time in the history of independent India, sought to capture the situation with regard to agricultural households in India. Admittedly, comparison with the first such survey (59th Round in 2003) is tricky given that the definition of what constitutes a “farm household” as given in the earlier round, and the definition of an “agricultural household” in this round are different.

While some authors are interpreting the findings to mean that we are on the right track of development with agriculture supposedly playing a diminishing role in the economy (‘Rural is Not Equal To Agriculture’, they say, with only 57.8% of rural households defined as agricultural households by the latest NSSO survey, with only 63.5% of these agri-households reporting cultivation as their principal source of income, and with only 59% of their income amount coming from cultivation and livestock), I would like to draw the readers’ attention to how this might not be the case. In 2003, incidentally, 60% of rural households were engaged in ‘farming activity’ and classified as farmer households by the definition deployed by NSSO then – not vastly different from the 58% figure in this round, with a definitional change at that. Let us also remember that the 70th Round findings have come around the time when we hear of the Intelligence Bureau filing a report to the Prime Minister on farmer suicides being on the rise, and how agrarian distress needs a comprehensive solution and not just short-term measures.

Two other data sets are pointing to why more attention needs to be paid to Agriculture, irrespective of how irrelevant it has become in terms of its contribution to the national GDP – the 68th Round of NSSO data on employment (Jul 2011-Jun 2012) and Census 2011. As per the 68th Round, 64.1% of rural workers in India (59% of the ‘usual status’ male workers and 75% of female workers) were engaged in Agriculture, when it comes to distribution by industry of work. As per Census 2011, while there were 9 million less cultivators in 2011, compared to 2001 (in percentage terms, it is a decline of 7.1 percentage points in the total workforce, to 24.6% in 2011), there were 36.8 million agricultural labourers added in 2011, compared to 2001 (an increase of 3.3% in terms of distribution of total workforce into agricultural labourer status, arriving at a figure of 30% of India’s workforce being categorized as agricultural labourers). In rural India, 33% were classified as Cultivators in the total workers and 39.3% as Agricultural Labourers by Census 2011. That adds up to 72.3% engaged in agriculture. It is important to note that the NSSO 70th Round tried to de-link the definition of agricultural household with possession of land and has expressly kept out those households which are completely dependent on agricultural labour out of the scope of the survey. Given all of this, it may not be completely appropriate to see positive signs from the latest findings.

What is worrisome is the trend discernible between 2003 and 2013 (59th and 70th Rounds). Only 29% were aware about MSP (Minimum Support Price) in 2003; in 2013, it ranged between 2.5% to 39.8% across crops. Only 4% had ever insured their crops and 57% were unaware of crop insurance in 2003. In 2013, across crops, more than 90% of agricultural households had no crop insurance. Groundnut, soybean, cotton and green gram were small exceptions with figures hovering around 86% to 90% not having crop insurance.

Out of 89.35 million farmer households in 2003, 48.6% were reported to be indebted, with the average amount of outstanding loan per farmer household being Rs. 12585/- at all-India level. At that time, 57.7% households had loans outstanding from institutional sources. In 2013, indebtedness in terms of average amount of outstanding loan per agricultural household was Rs. 47,000/- approximately, with 52% of agri-households were estimated to be indebted; out of this, 60% were from institutional sources, which is a minuscule improvement in terms of institutional coverage. In the lowest size class of land possessed, only 15% of outstanding loans were from institutional sources and the debt burden can be imagined from this piece of information.

57% of farmer households were cultivators, going by the principal source of income in 2003. In 2013, it is 63.5% reporting cultivation as the main source of income. It is above national average in states like Telangana (86.8%), Chattisgarh (80.5%), Assam (76.7%), Madhya Pradesh (75.3%), Jharkhand (72.5%), Maharashtra (71.7%), Bihar (69.7%), Karnataka (69.4%), and Uttar Pradesh (65.2%).

The most worrisome aspect is around receipts and expenditure of agricultural households. National average monthly income of an agricultural household is estimated at Rs. 6426/-. This then means about Rs. 107/- daily earnings per adult, taking two adults per household. In most places, this would be below minimum wages prescribed for unskilled workers. Average monthly income from cultivation is reported to be: 47.9%; from livestock: 11.9%; from wage/salary: 32.2% and from non-farm business: 8% of this income estimated at Rs. 6426/month/household.

While some might attribute this to a corrupt PDS programme in India, the above figures of income are actually corroborated by the fact that 4.9% of agricultural households have Antyodaya ration cards, and 36.4% BPL cards. 12.3% have no ration cards. This then could be the impoverishment that we have subjected our Anna Daatas to, the ones partaking in the food production processes in the country!

At the All-India level, across land size-classes, the average monthly income was Rs. 2115/- whereas the monthly expenditure of farm households was Rs. 2770/- in 2003. While it can be claimed that there is a marginal improvement in this situation in 2013 (average monthly income being slightly higher than average monthly expenditure at all-India level and cultivation and livestock farming contributing a higher share in monthly incomes compared to 2003), it is seen that things have worsened for the households in the lowest land size-classes when it comes to institutional coverage for credit needs.

A closer look at the income and expenditure findings across different landholding categories shows that around 6.26 crore agricultural households are running on a debt economy, so to speak. On an average, there is a deficit of Rs. 856/- per month per household in terms of their expenses exceeding receipts, for these households. This is the situation of nearly 70% of agricultural households in India, as the table below reveals.

This is where there is an urgent need to focus on agricultural incomes in India. Governments have to make themselves accountable in all their interventions to deliver minimum living incomes for all agricultural households. The need to focus on the economic well-being of farmers was something that the Farmers’ Commission had emphasized upon, moving away from the excessive yield-centric interventions of the agriculture ministry.

It is not all that difficult to take up regular income assessment surveys for more focused interventions for different sizes of landholders, different regions and crops, using the findings. The proposed income insurance scheme by the NDA government is one good way forward, as long as the insurance is against minimum living incomes that have to accrue to each agri-household (not rolling averages of past 3 years of yield and price, as is being proposed). Arriving at such minimum living incomes need not pose a huge challenge either. Our experience at fixing minimum wages, as well as pay commission scales in other sectors shows that coming up with a workable formula is indeed possible.

 

Size Class of land possessed (Ha) % age of agri households,

Totaling 9.02 crores

Total Monthly Income (Rs) (with 2003 figures given in parenthesis from NSS report 497) Income from cultiva-tion and farming of animals & %age of total income (2003 figures in parenthesis, from NSS Report 497) Total Consumption Expenditure (Rs.)

(with 2003 figure given in parenthesis from NSS report 497)

Avg out-standing loan amount in Rs.

(2003 amounts, NSS Report 498)

%age of out-standing loan from institutional sources (2003 coverage in parenthesis, NSS report 498)
<0.01 2.64% or

23.9 lac HHs

4561/-

 

(1380/-)

1211/-: 26.55%

 

(75/-: 5.4%)

5108/-

 

(2297/-)

31,100

 

(6121)

14.90%

 

(22.6%)

0.01 to 0.40 31.86% Or 2.87 crore HHs 4152/-

 

(1633/-)

1308/-: 31.50%

 

(390/-: 23.8%)

5401/-

 

(2390/-)

23,900

 

(6545)

19.00%

 

(43.3%)

0.41 to 1.00 34.92% or

3.15 crore HHs

5247/-

 

(1809/-)

2774/-: 52.87%

 

(896/-: 49.5%)

6020/-

 

(2672/-)

35,400

 

(8623)

53.20%

 

(52.8%)

1.01 to 2.00 17.16% or

1.55 crore HHs

7348/-

 

(2493/-)

5027/-: 68.41%

 

(1680-: 67.4%)

6457/-

 

(3148/-)

54,800

 

(13762)

64.80%

 

(57.6%)

2.01 to 4.00 9.31% or

83.9 lac HHs

10730/-

 

(3589/-)

8520/-: 79.40%

 

(2742/-: 76.4%)

7786/-

 

(3685/-)

94,900

 

(23456)

67.50%

 

(65.1%)

4.01 to 10.00 3.72% or

33.5 lac HHs

19637/-

 

(5681/-)

16744/-: 85.27%

 

(4688/-: 82.5%)

10104/-

 

(4642/-)

182,700

 

(42532)

71.50%

 

(68.8%)

10.00+ 0.39%

(3.5 lac HHs)

41388

 

(9667/-)

38307/-: 92.56%

 

(8434/-: 87.5%)

14447

 

(6418/-)

290,300

 

(76232)

78.90%

 

(67.6%)

 

Meanwhile, supporting agri-households through appropriate price interventions continues to be a major measure for improving their situation. If the government takes proposals like price deficiency payments (where the difference between MSP and the actual price realized by the farmers is made good by direct payments, without this resulting in higher prices for consumers) seriously, in addition to a more expanded procurement including improving efficiency of such procurement and distribution, there is some hope for the millions who continue to toil to feed the nation.

There is also no getting away from the fact that crop insurance has to improve drastically in its design and implementation in the country, especially in this age of climate change. If we do not address these issues as a nation, the inter-sectoral disparity will be too stark, leaving behind too many people in the short and medium run, without any dignified alternatives being provided elsewhere for them.

 

  • Kavitha Kuruganti is a member of the GoI Committee on Fixing of Minimum Support Prices and National Convenor of Alliance for Sustainable & Holistic Agriculture (ASHA)

 

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