Impossible to double farmers' income in six years, says Abhijit Sen

Ex Plan panel member also says demonetisation took a huge toll on cultivators and labourers; favours loan waivers, is skeptical about cash support scheme

Former member of the erstwhile Planning Commission, Abhijit Sen, has said that the ambitious aim of doubling farmers’ incomes is impossible target in the period the government has set for it. Addressing an Economics Summit organised by Sri Ram College of Commerce in Delhi, he however commended the government on changing the nature of the debate from farm production to farmers’ incomes. 

“There are too many people employed in agriculture, that the sector cannot feed or provide income to these many,” he explained. 

He said that while this ails the farm sector in India, the government’s decision to demonetise high-denomination currency notes from circulation in 2016 took a huge toll on farmers and labourers. “The slow transition from agriculture to informal non-farm activities was affected by demonetisation, and those who had made the transition had to fall back to agriculture, worsening their situation,” he said. 

On the recent speculation on the government planning a major intervention in the farm sector, Sen said that he is skeptical about the working of a cash support scheme. 

“What is being discussed is not a universal scheme, and it could be distortionary in its own way,” he said. Such a scheme would be very different from the underlying concept of universal basic income, and choosing a few over everyone else might distort the market in unexpected ways, he said. 

However, he supported the idea of farm loan waivers, saying that they “restart the economy” by letting banks lend fresh finance to the agriculture sector. 

While agreeing that prices or demand-side issues have taken centre stage under the present government, he said supply-side issues such as production and productivity should be put in the backseat. 

He likened the performance of the farm sector under this government to that under the first National Democratic Alliance government led by A B Vajpayee, saying that both the BJP-led governments were low farm-price regimes. 

However, he also said that the NDA tenures coincided with fallen global commodity prices, while the UPA tenure coincided with booming global prices, making different impacts on domestic prices and policy. 

One thing that would remain an area of exploration, he said, is the falling rural demand for food. “In India, which is more rural than urban even today, more than half the agricultural demand too comes from the rural. Thus, fallen wholesale prices speak a lot about rural demand,” he said.