Amid continuous protests against the contentious farm laws, a Situation Assessment Survey (SAS) of Agricultural Households, Land and Livestock Holdings of Households of Rural India, 2019, conducted from January to December 2019 revealed a 59% surge in farmers’ incomes that are not adjusted for inflation, on a nominal basis.
The survey also showed that farmers’ incomes adjusted for inflation — which economists call real income — have risen by about 2%. However, when the inflation-unadjusted incomes are distributed among the number of farming households to derive per capita farmers’ incomes, one gets a figure of ₹27 a day, as reported by HT earlier.
In an emailed interview to HT’s Zia Haq, Union agriculture secretary Sanjay Agrawal answers key questions on the survey.
1. This survey is a departure from previous situational assessment surveys in that it accounts for earnings from land holdings and livestock, not just crops. The parameters of the two surveys are different. What’s the rationale for this?
That’s correct. The National Statistics Office (NSO) of Ministry of Statistics and Programme Implementation (MoSPYI) carried out a survey on “Land and Livestock Holdings of Households and Situation Assessment of Agricultural Households” in the rural areas of India with an integrated schedule of enquiry. Prior to this, Land and Livestock Holding Surveys (LHS) and Situation Assessment Survey (SAS) of Agricultural Households used to be conducted as separate surveys. The idea is to take a holistic view of a farmers’ income. There is no sense in doing separate surveys to assess incomes from dairy and livestock, for instance, because dairying is a major area of farming activity.
2. What is the average monthly income of an agricultural household according to this survey? Can you explain in full all the sources of income that were taken into consideration?
Sure. At the all-India level, an average monthly income per agricultural household during agricultural year 2018-19 is ₹10,218. Out of the total average, income from wages is ₹4,063, followed by cultivation /net receipt from crop production ( ₹3,798), net receipt from farming of animals ( ₹1,582), net receipt from non-farm business ( ₹641) and income from leasing out of land ( ₹134). Out of the total income earned by agricultural households, 39.8 % of income is earned from wages followed by cultivation/net receipt from crop production (37.2 percent), farming of animals (15.5%), and income from non-farm business (6.3%).
3. So, the survey includes non-farm wages too?
Yes, the objective of the survey is clear. It is to capture the current income situation of an
agricultural household at a holistic level and not leave out any source of income. That’s how we can know what their total income situation is. SAS definition of cultivator is any household who gets output worth ₹4,000 a year and is self-employed in agriculture as main or subsidiary occupation. So, if one keeps one goat just to get little milk for tea, etc, and gets, say, 150 litres of milk a year, and is engaged in non-agriculture activity as the main occupation, he becomes a cultivator based on this definition. Thus, going by the definition, this 37.2 % from crop production is not the right reflection of income from cultivation by land-owning farmers.
4. Can you clarify how the survey arrives at the average monthly income of ₹10,218 and its methodology?
Sure, I am happy to explain. An agriculture household earns income from different sources as evident from the survey report. Members of an agriculture household may be pursuing various agriculture and non-agricultural activities. It reveals that wages comprise the maximum share of the income of an agriculture household followed by income from crops. Wages can be from different sources like agriculture wages for a variety of farm activities and also MGNREGS. If the average monthly income of the agriculture household is ₹10,218 as mentioned in the report, then the average daily income would be 10,218×12/365= ₹336. Even if we take the monthly income from the crops alone (Table 1) which is ₹3,798, then the daily income would be 3,798/30 = ₹126 which is much higher than ₹27 projected by a section of the media.
Table 1. Average Monthly Income per Agricultural Average
Monthly Income in Rs. Household Percentage
1. Income from wages ₹4,063 39.8%
2. Income from crop production ₹3,798; 37.2%
3. Income from farming of animals Rs. 1,582; 15.5%
4. Income from non-farm business ₹641; 6.3%
5. Income from leasing out of land ₹134; 1.3%Average monthly income ₹10, 218
(Source: NSS Report No. 587: Situation Assessment of Agricultural Households and Land and Livestock Holdings of Households in Rural India, 2019)
From the above table, it is evident that the average monthly income of an agricultural household is ₹10,218. Out of which, income from wages ₹4,063 (39.8%) income from crop production ₹3,798 (37.2%), income from farming of animals ₹1,582 (15.5%), income from non-farm business ₹641 (6.3%), income from leasing out of land ₹134 (1.3%). Source: NSS Report No. 587: Situation Assessment of Agricultural Households and Land and Livestock Holdings of Households in Rural India, 2019
5. The survey shows an inflation-unadjusted increase in total monthly incomes of about 59%, if one compares the current income level of ₹10,128 with ₹6,426 from the previous 2012-13 survey. But part of the increase is because of accounting of non-farm income such as land lease? But part of the increase in farm income is because the survey accounts for non-farm incomes too, such as land lease?
As I said, the idea is to measure an agricultural household’s total income situation. The title of the survey itself suggests so. There is no reason at all to do separate surveys of dairy and livestock income. The objective is to get a comprehensive idea about the income situation of an agricultural household. Let me re-emphasise that even if we talk of income from crops alone, that works out to be ₹126 per day, not ₹27 or so as some media reports say. Beside the increase in income of agri households, they benefited from increase in real prices of agriculture commodities. The WPI for agri in these six years increased from 111 to 134 and the WPI for non-agri increased from 106 to 116. Thus, the terms of trade index moved in favour of agri from 104 to 120, an increase of 16 per cent between 2012-13 and 2018-19. Source: Niti Aayog.
6. Don’t you think farmers need even higher incomes, adjusted for inflation, because they are still affected by poor realisations as markets are always uncertain?
Of course. That is why there has been an unprecedented enhancement in budget allocation. In the year 2013-14, the budget allocation for the department of agriculture was only ₹21,933.50 crore. This has been increased by more than 5.5 times to ₹1,23,017.57 crores in 2021-22.
A total of ₹1.58 lakh crore has been released so far to 11.37 crore farmers’ families through direct transfer into their bank accounts under the PM-KISAN scheme. The recently enacted farm law related to Trade & Commerce of Farmers Produce creates an ecosystem for sale of scheduled agriculture commodities at farmgate level, which shall create opportunities of value addition at the village levels, leading to further enhancement of agricultural household’s income. Further, this will accelerate more investment in marketing and supply chain infrastructure, including storage facilities near to farm gate, creating more employment opportunities for rural areas.
The farm law related to the Farming Agreement shall support farmers, especially small and marginal farmers, with a legal framework to produce high value crops, which shall be instrumental in additional income from cultivation. The fixation of MSP at one-and-a-half times the cost of production and ensuring enhanced procurement has been a major focus as well. The institutional credit for farmers has increased from ₹7.3 lakh crore in 2013-14 and has reached over ₹16.6 lakh crore in 2020-21 The government has approved ₹1 lakh crore Agriculture Infrastructure fund for building post-harvest and other agriculture-related infrastructure near the farm gate. The government has been actively promoting Farmer Producer Organizations (FPOs) for better bargaining power with the market and to get good prices for their produce.
7. Do you think there is any improvement in the situation of farmers between the two surveys 2012-13 to 2018-19?
Yes. The viability of agriculture has improved, the overall indebtedness has come down and appetite for risk mitigation has improved.
Viability of agriculture
The number of rural households getting primary income from agriculture has gone up from 54% in 2013 to 58% in 2019. That is agriculture assumes more economic importance to more rural households. The income of agricultural households increased in nominal terms by 59% between 2013 and 2019 (from 6,426 to 10,219). The Consumer Price Index (rural) increased by 35% (from 105 to 142) during the same period, suggesting a real income increase of 24% to agricultural households. The share of income from crop production of agricultural households in the lowest size class of land possessed (having < 0.01 hectares or landless) has increased from 1% to 15% between 2013 to 2019. Their income from farming (including livestock farming) has increased from 27% to 34%.
Overall indebtedness of agricultural households has come down
The percentage of agricultural households indebted has come down from 52% in 2013 to 50% in 2019. The percentage decrease is substantial in agricultural households having less than 1 acre of land. In land size class < 0.01, the decrease is 3.4% (from 41.9% to 38.5%) and in the next lowest size class (having <0.04 hectare (one acre)) the decrease is a maximum of 6.5% (from 47.3% to 40.8%).
The amount of outstanding credit has come down substantially in the lowest land size class that is from ₹31,100 to ₹26,883.The decrease in nominal terms is 14%, adjusting for inflation the decrease is more than 50%.
Crop insurance (risk mitigation) has gone up
The percentage of crop-producing households insuring their crops has substantially increased, which indicates more farmers are adopting risk mitigation measures. During July-December, while 8.3% households insured paddy in the present survey, the percentage is 4.8% in the corresponding half of 2012-13, for soyabean 27.5% and 14%, for cotton, 25.4% and 10.4%.
During January-June, those insuring paddy are 13.9% in the present survey and 3.9% in the corresponding half of 2012-13; for rapeseed/mustard, it is 8.9% and 5.1% ; for cotton, those insured are 28.8% and 14.9%.