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LATEST NEWS UPDATES | Why are farmers angry -Harish Damodaran

Why are farmers angry -Harish Damodaran

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published Published on Jun 7, 2018   modified Modified on Jun 7, 2018
-The Indian Express

Behind the agitation, stagnant income and deteriorating terms of trade for agriculture

New Delhi:
Why are Indian farmers an angry lot today — stopping the supply of vegetables to cities and even spilling milk on roads?

An answer to this can be found in the estimates of gross domestic product/ national income growth from the Central Statistics Office. The accompanying table shows two sets of growth figures. The first is the annual or year-on-year growth in the gross value added — GVA, which is basically GDP net of product taxes and subsidies — from agriculture for various quarters from 2012-13 to 2017-18, both in constant (2011-12) and at current prices. The second one looks at these growth rates in the GVA for the economy as a whole.

The striking thing emerging from the data is how agricultural growth has collapsed in ‘nominal’ terms, i.e. at current prices unadjusted for inflation. For farmers, increase in output — which is what growth in ‘real’ terms or at constant prices measures — is important. But what ultimately matters more for them is income, which is a product of both output and current prices. And since GVA is the value of output less the cost of all inputs and raw materials that go into the production of any good, it is a reasonable proxy for income or ‘take home’ for the farmer.

Viewed from that perspective, only six out of the 16 quarters of the Narendra Modi government from April-June 2014 have recorded double-digit nominal farm income growth, as against seven in the preceding eight quarters. Moreover, there has been a marked narrowing of the gap between nominal and real income growth. This is so especially since October-December 2016, which was the quarter when demonetisation happened. The most extreme case was April-June 2017: in that quarter, nominal agricultural growth, at 0.63%, was actually below even the increase of 3% in real terms. Simply put, while farm production rose 3% year-on-year, prices, however, fell by 2.37%, resulting in the value of output going up by just 0.63%.

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The Indian Express, 7 June, 2018, http://indianexpress.com/article/business/economy/farmers-protest-crop-failure-milk-price-loan-waiver-crop-insurance-5206422/


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