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Doubling Farmers' Income by 2022 is Yet Another Modi Jumla

Mar 6, 2019

Vivek Kaul

The farmer...

Is desh ka kisan...

What about him? Well, he is not doing well.

Take a look at Figure 1, which basically plots the growth in agriculture, forestry and fishing, over the years.

Figure 1 tells us that agriculture, forestry and fishing, is expected to grow at 2.75% in 2018-19, the current financial year. This is the lowest in three years, though better than the years 2014-15 and 2015-16.

Figure 1: Slow Growth of Agriculture

Also, it needs to be stated here that the fishing part of the agriculture, forestry and fishing, pushes up the overall growth figure. In 2017-18, agriculture, forestry and fishing, grew by 4.98% on the whole. But if we subtracted fishing from it, the overall growth was only 4.56%.

The numbers for fishing for 2018-19 aren't currently available. Nevertheless, given the past trend it can safely be said that the actual agricultural growth in 2018-19 should be around 2.5%, once we adjust for the fast growth in fishing.

What does this really mean? It basically means that the income of a large part of the country which continues to be dependent on agriculture is growing at a very slow rate. In fact, a 2017 research paper by NITI Aayog tells us that the ratio of the income of a non-agriculture worker to that of a cultivator stands at 3.12.

The growth that I have been talking about up until now is real growth which has been adjusted for inflation. Now let's take a look at nominal growth in Figure 2, which hasn't been adjusted for inflation. It will soon become clear as to why I am doing this. Also, we are looking at quarterly data now, instead of the yearly data as we did earlier.

Figure 2: Nominal Growth Slowest in the Last 27 Quarters

Let's take a look pointwise.

1) The nominal growth of agriculture, forestry and fishing, during the period October to December 2018, stood at 2.04%, the lowest in 27 quarters, the data for which has been shared in Figure 2. Of course, this isn't good news in an election year. This also explains why the Modi government has been in such a hurry to launch the PM-Kisan scheme, without really having the necessary infrastructure in place.

2) Figure 2 above also tells us that in the last seven quarters, agriculture, forestry and fishing, hasn't grown in double digits.

3) Why is double digit growth important? The Narendra Modi government, over the years, has talked quite a lot about doubling the income of farmers by 2022. It hasn't really specified whether the idea is to double the income of the farmers in nominal terms or real terms. Given that we don't know this, let's first work with the idea that the promise was to double the income of farmers in nominal terms.

In fact, in February 2016, PM Modi, had talked about doubling the income of farmers by 2022. For the income of the farmers to double between 2016 and 2022, it would have to grow at 12.3% per year, over the six-year period.

4) The average rate of growth of agriculture since April 2014 has been a little over 8% in nominal terms. Hence, there is no way that the income of the farmers can be doubled by 2022, even in nominal terms, forget real terms.

5) In fact, let's take a look at how things look in real terms, as well. This is important because inflation, or the rate of price rise, needs to be taken into account. There is no point in income going up primarily because of inflation because at the end of the day, the purchasing power stays the same or doesn't go up much.

Let's take a look at Figure 3, which basically plots real growth in agriculture, forestry and fishing over three month periods, over the years. Since we are talking about real growth now, it has been adjusted for inflation.

Figure 3: Real Growth Slowest in the Last 11 Quarters

Figure 3 tells us that the real growth in agriculture, forestry and fishing, between October and December 2018, stood at 2.67%, the slowest in 11 quarters. This is again a sign of the agricultural distress that prevails in the country. As mentioned earlier, the nominal growth had stood at 2.04% during the same period. If the rate of nominal growth is lower than the rate of real growth, what does it mean? It basically means that inflation is negative i.e. prices are falling. Hence, the prices of agricultural produce have been falling, which is clearly not good news, neither for the farmers nor for the government.

6) If we take the per year rate of real growth of agriculture, forestry and fishing, from April 2014 onwards, around the time Narendra Modi became the prime minister, to March 2019, it comes in at 2.9% per year. At this rate, it will take a little over 24 years from 2016, for the income of farmers to double. And that's a long time away.

7) Just talking about doubling of income of farmers will not lead to that happening. Basically, what is needed is a fundamental overhauling in the way farming is carried out in this country, the agriculture produce is procured and then sold. Of course, that is easier said than done. It needs a lot more effort than just coining jumlas like the income of farmers will double by 2022.

Regards,

Vivek Kaul
Vivek Kaul
Editor, Vivek Kaul Publishing

PS: Now you can follow Vivek Kaul on Social Media and get Vivek's updates on the critical issues affecting the economy and your wallet... as they happen. Follow Vivek on Facebook, Twitter, and Google+.

Vivek Kaul is the Editor of the Diary. He is the author of the Easy Money trilogy. The books were bestsellers on Amazon. His latest book is India's Big Government - The Intrusive State and How It is Hurting Us.

Disclaimer: The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

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14 Responses to "Doubling Farmers' Income by 2022 is Yet Another Modi Jumla"

AKS

Mar 11, 2019

Great Analysis, but of no use, as our writer will sit in his AC room and churn out satirical articles then doing anything substantial.

Like 

s.k.limaye

Mar 10, 2019

You have hit the nail on the head . But ' bhakts ' would turn a blind eye and deaf ear to any thing against Modi , howsoever justified it be . And the saddest part is well educated people also troll me if I share any such article with them !

Like (3)

Rajkumar

Mar 9, 2019

You are one of those nuts, without having any knowledge with regards vision set by present rigime, you should be ashamed of using words as 'Jumla' and misinform your readers....spend time in understanding what modi means to increase the farming productivity and also to increase the farmers income...

Like (3)

MainAzaadHoon

Mar 8, 2019

Thanks Vivek! Ignore the sheeple of India because in the land of the blind, the one-eyed man is king. And this one-eyed man is also an emperor who has no clothes, but no one around him has the courage to say it. If one says it then they are sent packing to Chicago, or rather they out of dignity return to Chicago. A prophet is without honour only in his own country. Please keep these writings coming. The spineless presstitutes of India will rarely do this kind of fearless reporting anymore. They won't dare to bite the hand that feeds!!

Like (2)

Raghav Agarwal

Mar 8, 2019

It is so strange that my fellow readers complain excessively that Vivek Kaul is writing bad stuff, he is writing against Modi, etc. But the point is, can you dispute what he is saying? He is not inventing any statements. You can go and check exactly what this govt and its people (Modi) have said on various websites. That is a fact. Now, coming to doubling farmer's income or whatever Modi has promised, what action is happening on the ground? NOTHING. What regulations are changing in parliament/state legislatures (to ease distribution, processing, marketing)? NOTHING. What is the govt doing to reduce the imbalance that is occuring because of excess rice and wheat production and not enough of F & V? NOTHING I have to say, it is not only Modi's fault. The state govts (some/many) of them are non-BJP. But don't make empty promises.

Like (1)

DDB

Mar 6, 2019

I have stopped reading articles of the author as his political leanings have been influencing his writings which is far from reality."Inconsistencies is the hallmark of economists "applies to the author undoubtedly.

Like (6)

harish Saini

Mar 6, 2019

Urban Naxals style, Connecting every problem/issue to Modi Ji.

Like (4)

LOGANATHAN

Mar 6, 2019

Doubling Agriculture does not mean doubling farmers' income.. In corporate parlance, income means revenue. ( Farmers or Modiji may be under the impression that their Net Profit will be doubling by 2022 ). For Income ( read revenue or selling price ) to double, production need not necessarily double, but productivity and sale price put together should double.... What is the expectation or Promise of Modji or the farmers ? At what rate the productivity will increase, at what rate the price will increase, at what rate the costs will increase and at what rate the farmers' profit ( if it can be called so ) will increase ?

Like (1)

KD

Mar 6, 2019

If Modi's government did nothing just like any other coalition government then also economy would be better off. Why did they started trade war with USA? Is it justified to put 50% tax on motorcycles or constraint Amazon / Flipkart when 25% of India population is working in retail.

Like (1)

Avinash

Mar 6, 2019

As an armchair economist you are pretty good at dissecting facts. Mr.Modi has not claimed that farmers income will double he has stated his intention and his govt is working towards achieving it with sincerity. By calling it a jumla or a Fake promise you are doubting the sincerity of our PM. I stopped reading your articles long ago since I understood the ideology with which you write.... just lame duck. But I had to comment on the title of this article.

Like (3)
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