Average farm incomes rose by 30% to 70% in last 4 years

Average farm incomes rose 30-70% in last 4 yrs
Average farm incomes rose 30-70% in last 4 yrs

Indian Market
by 5paisa Research Team Last Updated: 2022-07-18T17:40:04+05:30

Back in 2018 when the finance minister had announced the aggressive minimum support prices (MSP) formula in the Union Budget, the promise was to double farm incomes by 2022. Where exactly does India stand on this issue? Have Indian farmers been able to double incomes in the last four years. Of course, we must provide for the COVID crisis combined with the recent global headwinds. However, a quick look at the numbers tells you that while farm incomes may have fallen short of the target, it has done pretty well.

How farm incomes panned out in the last 4 years?

It must be admitted that the Indian farm sector has seen some sharp changes with positive implications on the farm incomes. One thing worth noting is that even during the peak of the pandemic, India’s agricultural output was still growing. In fact, at a time when manufacturing and services were seeing deep negative growth, it was the agricultural sector that actually managed positive growth in the previous two financial years. But let us get back to the subject of the shift in farm incomes in this period.

    • Thanks to robust prices of food products, India saw a surge in agricultural exports. For instance, the salutary policy framework adopted towards agricultural exports has been instrumental in boost the total agri exports in the fiscal year FY22 to $50 billion.

    • Cropping patterns have been largely influenced by the shifts in demand. For instance, there is a perceptible improvement in the eating habits and nutritional focus of specific population groups. This has ensured upgradation and rotation in cropping patterns.

    • While farm incomes did not double between 2018 and 2022, it has grown with variations between 30% and 70%. That should be regarded as reasonable considering the impact of the COVID pandemic as well as the current global headwinds.

    • In reality, there were wide disparities in income according to  report prepared by SBI Research. For instance, there was a clear doubling of farmer incomes between 2018 and 2022 in specific groups and regions like the Soyabean farmers in Maharashtra and the Cotton farmers in Karnataka.

    • If you leave these two segments out, then the agricultural baskets have grown between 30% and 70%. One rather disturbing factor is that the income boost was more visible for farmers growing cash crops as compared to the farmers growing non-cash (food crops).

    • The rise in farm incomes was not just driven by cash crops but also by allied services .In fact, the general allied / non-farm income showed a significant growth of 40% to 80% in majority of states. This rather corroborates the findings of the 77th National Sample Survey that source of farmer income has become increasingly diverse apart from crops.

    • Between 2014 and 2022, the minimum support price (MSP) sharply aligned with market linked pricing. In fact, since 2014, the income levels have actually grown anywhere between 50% and 130%. The floor price concept has ensured that farmers are able to realize a much better price in the market.

The gist of the findings has been that loan waivers have hardly added any value to farm incomes. What has actually added value is the focus on MSP and in improving supplementary farm incomes. Critics may still have a counter point, but the fact is that in a tough market farmers are better off. At the end of the day, that is what really matters.

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