SBI Research
State Bank of India’s chief economist said in an elaborate report on Sunday that farmers’ income, which has risen in the range of 1.3-1.7 times from the FY18 levels, have benefited due to higher yields of cash crops like soyabean and cotton than non-cash crops.
The report, based on key farming states like Maharashtra, Rajasthan, MP, UP, Karnataka, and Gujarat among others, notes that allied/non-farm income showed a significant increase of 1.4-1.8 times in the majority of states in tandem with farm income during this period, substantiating the trend in the 77th National Sample Survey that said source of farmers income has become increasingly diverse apart from crops.
The agrarian economy has undergone some tectonic shifts of late, emerging as the anchor for the broader economy during the tumultuous days of the pandemic. This report considers the factors behind such transformations through a close examination of various indicators and factors impacting farm market in India.
Despite much hype and political patronage, farm loan waivers by states have failed to bring respite to intended subjects, sabotaging credit discipline in select geographies and making banks/ financial institutions wary of further lending.
The Kisan Credit Card (KCC) scheme has another instrument which helped bring in a large number of farmers under the ambit of a formal credit mechanism at a subsidised interest rate. There are 7.37 crore active KCCs however, current regulatory norms allow KCC renewal every year with full repayment of principal and interest unlike other loans where interest servicing is sufficient for renewal.
Dalits and NSGs (with their lower income and inflation resistant status) might be able to secure better rates of interest. However, some radical changes in this are called for like added use of technology say making it app-based through digital channels to ensure speedy review and renewal practices.
Farmers in India have reported a rapid increase in their incomes over the past five years. According to the National Statistical Office’s (NSO) situation assessment of agricultural households and land and livestock holdings in rural areas (the latest published data), the average monthly income of agricultural households increased by 59 per cent to Rs 10,218 in the six years to FY19 compared with Rs 6,478 in FY12.
