It is heartening that Narendra Modi government’s persistent efforts for the farmers are now yielding desired results. On the back of a plethora of ambitious and encouraging government policies like easy availability of fertilizers, crop insurance schemes, easy access to credit, increased focus on cash crops, encouragement to agri-entrepreneurship, farm loan waiver to the distressed farmers, kisan credit card scheme and others, the farm sector now appears to be undergoing a tectonic shift. Compared to financial year 2017-18, farmer’s income has doubled in fiscal 2021-22 for certain crops in some states. Even in remaining states, the income of the farmers grew in the range of 1.3 to 1.7 times during last five years.
The minimum support price (MSP) increasing by 1.5 to 2.3 times since 2014 and becoming increasingly aligned with market linked prices, has contributed significantly in ensuring the passage of higher prices to farmers. Moreover, setting the floor price benchmark for multiple crop varieties, which are 23 presently, also sufficiently inspire farmers to move over to the crop varies which promise better yield. A significant jump in farm and non-farm income of farmers is helping a number of rural people imbibing entrepreneurial spirit in their efforts. Aspirational districts programme has also been a huge success in respect of self help group financing in last four years, assisting needy farmer to access required resources for their cultivation.
The Kisan Credit Card scheme (KCC) is doing a great job in bringing a large number of farmers under the formal credit mechanism. Presently, KCC loans are available to farmers engaged in crop husbandry, animal husbandry and other allied activities for both the short term and long term. The government of India is also implementing an interest subvention scheme for short term crop loans through KCC, under which, short term loans up to Rs. 3 lakhs are given to the farmers at concessional rate of 7% and additional 3% Prompt Repayment Incentive (PRI) makes the effective rate of interest at 4%.
Driven by government policies, the exports of agricultural and processed food products rose by 14 percent in the first three months of the current Financial Year 2022-23 compared to the corresponding period of FY 22. India’s agricultural products exports grew by 19.92% during 2021-22 to touch USD 50.21 billion.
A research report by SBI has clearly shown that the farm sector is currently in the throes of a significant structural shift. However, farmers engaged in cash crop cultivation saw their income increase at a significantly higher rate, compared to those engaged in cultivation of non-cash crops. For example, the income of farmers cultivating soybean in Maharashtra and cotton in Karnataka became double during this period. While, allied/non-farm income also showed a significant rise of 1.4-1.8 times in the majority of states. The 77th National Sample Survey corroborated that the source of farmer income has become increasingly diverse apart from crops.
However, since 2014, out of about 37 million eligible farmers, only around 50% of farmers received the amount of loan waiver till March 2022. Notably, in some of the states more than 90% of farmers received the debt waiver amount. SBI is of the view that farm loan waivers by states have failed to provide relief to the intended recipients, sabotaged credit discipline in certain geographies and made banks wary of further lending.
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