Agriculture is pivotal for socio-economic development of the country as it employs about 45 percent of the population directly or indirectly, and contributes a mere 13-15 percent to the nation’s GDP. The growth in agriculture should help inclusive growth amongst small and marginal holders through increased income. A major problem of these households is poor than the people working in the non-agriculture sector.
As per the NSO survey, the farm household income with landholdings of 0.01 to 0.4 ha is Rs. 4152 per month and that of farms having less than 0.01 ha are Rs. 4561 per month. Under such circumstances, access to capital, technology, and markets is a mirage for these categories of landholdings, as they are left with a meager amount of Rs. 55 and Rs. 251 per month respectively for the farmers with landholdings of 0.01 to 0.4 ha and less than 0.01 ha. Another major constraint for creation of assets and investment in agriculture is outstanding loan Rs. 31100 and Rs. 13900 among farmers with landholdings of 0.01to 0.4 ha and less than 0.01 ha. Now the biggest challenge before the policymaker is to increase the income of farm households belonging to these categories.
Farm loan waiver as a solution for the problem of small and marginal farmers has not percolated down as 50 percent of them have not availed credit from any formal sources (NSSO, 2013). This situation is still grim among the marginal farmers. Only 15 percent of the farmers have access to formal credit which includes government, cooperatives, and bank for the farmers having the landholding less than 0.01 hectare.
Till today, traders, money lenders, commission agent, etc remained a major source of credit to small and marginal farmers. On the contrary with the increase in the size of holding, the participation of farmers in formal credit has increased. Against the backdrop, there is a need to revisit the loan waiver as a policy initiative. Loan waiver is a short term relief to the farmers only and will not act as a means of solution to the problem of small and medium farmers. Constraints remained same across the supply chain whether it is access to finance, post-harvest management, access to market, and other support services are concerned.
Now burning question before policymakers are to increase the income of the farmers belonging this segment. This becomes even more pertinent because of the unskilled nature of the farmers and uneconomic holdings. The options left with them is either to continue the agricultural sector with such a low income or to search an alternative option outside the agricultural sector. The latter is the only feasible or better option. Because in spite of various welfare schemes and programs in place, there is little or no improvement in their status. Even though the target of doubling farmer’s income is achieved, the earnings of the lowest category among the marginal farmers would amount Rs. 9122. Now, this amount of income marginal farmers can expect in the year 2022, which is just a hope.
Because of immense pressure on agriculture (48%) in terms of the population engaged, now there is a need to shift the population engaged in agriculture to non-agriculture sectors. The development pattern of India showed that economy has move to services sector based economy while left the premature manufacturing sector out of the development process.
Read more: WHY ARE INDIAN FARMERS ANGRY?
Because marginal farmers are unskilled, one of the strategies to absorb this large unskilled population is to create ample employment opportunities in the labor-intensive manufacturing sector. This, a massive Skill development program initiated by the Government of India may act as a complementary factor to absorb the major chunk of the population working in the agriculture sector. Now, creating a pool of skilled manpower alone is not enough to take out the heavy dependence of population from agriculture.
A land bank concept should be introduced, in which the marginal farmers can submit their land. This land bank allows this land to big farmers for cultivation but ownership of land remained with those marginal farmers. This strategy may improve marginal farmers condition by providing them sufficiently paying job and rent from the land submitted in the land bank. Market participation through farmers producer organization (FPO) is a prolific option to get a competitive price. Agriculture sector needs structural and effective reforms that bring the long-lasting solution for small and marginal farmers as well as for the economy.
The article is written by Dr. Waseem Khan, Ph.D. in Agricultural Economics and Business Management.