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The Economic Survey 2023-24 , released on July 22, 2024 ahead of the Union Budget, has revealed a critical shortfall in agricultural investment, posing a significant challenge to the government’s ambitious goal of doubling farmers’ incomes.
The Centre claims that investment in agriculture has been promoted; however, it remains dependent on public investment and is insufficient to double farmers’ incomes, the report has revealed. Long-term large private investment is required to achieve results and modernisation.
The central government had set an ambitious goal of doubling farmers’ income by 2022-23. This target was announced in the 2019-20 interim budget by then Finance Minister Piyush Goyal, who said, “We have a vision to double the farmers’ income by the 75th year of Independence.” However, the survey shows that this objective remains unfulfilled.
Economic Survey 2023-24 also quoted a 2016 report Doubling of Farmers Income, which indicated that to double farmers’ income over the period of 2016-17 to 2022-23, income would need to grow at an annual rate of 10.4 per cent in the farm sector. This, in turn, would require an annual growth rate in agriculture investment of 12.5 per cent.
The latest Economic Survey report stated that the gross capital formation (GCF), which is improving the agriculture sector, is increasing year after year. GCF refers to the total investment in physical assets over a given time period. It is the investment in new and existing fixed assets such as machinery, buildings, land improvements, equipment purchases, and storage facility modifications. GCF refers to agricultural modernisation investments, investments in improving productivity and ensuring sustainability are also important indicators.
From 2016-17 to 2022-23, the average annual growth of GCF was only 9.7 per cent, the report has found. While there has been improvement, it falls short of the targeted rate.
The GCF of the agriculture sector and the share of GCF in the agriculture and allied sectors as a percentage of Gross Value Added (GVA) has been growing steadily, mainly due to increased public investment. The GCF of the agriculture sector grew at the rate of 19.04 per cent in 2022-23, and the GCF as a percentage of GVA rose from 17.7 per cent in 2021-22 to 19.9 per cent in 2022-23, suggesting an increase in investment in agriculture
Economic Survey 2024 report
Public investment remains the dominant driver, with the private commercial sector contributing less than 2 per cent, the survey report found.
The report clarified that investment in agriculture mainly refers to land, cost and production related investments. It does not include investment in market, storage, transportation, grading and post-harvest infrastructure.
The Economic Survey report stated that “despite the increasing trend in GCF, there is a need to further boost agriculture investment, especially in the context of doubling farmers’ income.”
One significant challenge in this area is the fragmentation of agricultural land, which has hampered farmers' investments, the report said. “On the other hand, the private corporate sector’s share has remained below 2 per cent,” it added.
Infrastructure development, particularly post-harvest facilities, has the potential to significantly reduce waste, maintain produce quality, and increase farmer income, according to the Economic Survey report.
The review report also stated that the agriculture sector receives the most subsidies, particularly for fertilisers and energy, which has increased public investment. Fertiliser and energy subsidies account for one-third of total public investment in agriculture. The subsidy has doubled in ten years, from 2011-12 to 2020-21.
According to the paper, subsidies increase farmers' income and production in the short term. However, significant investment is required in the long run to modernise the sector. This will necessitate post-harvest facilities. To strengthen these, the active participation of private corporate companies is also required.
The report suggested that existing and new policies should be revised because Indian governments do not allocate enough resources to adequately support farmers.
Earlier in February 2024, Union Finance Minister Nirmala Sitharaman presented the 12th and second interim budget of the Modi government. As anticipated, the interim budget was an election budget with no great expectations. It included the issue of doubling farmers’ income, but there were no announcements of any concrete decisions for the future.