Along with incomes, agri needs an investment push

livemint.com:

₹1.25 trillion to the ministry of agriculture, with about 80% earmarked for schemes entirely funded by the central government. While allocations are increasing, much of it is going towards subsidies rather than forward-looking investments. In recent years, direct income support to farmers through the PM-Kisan scheme— ₹6,000 per year to farm households—has come to dominate expenditure.

For 2023-24, PM-Kisan had a budget allocation of ₹60,000 crore. PM-Kisan, along with two other schemes focused on crop insurance and interest subsidy to farmers, together received ₹96,000 crore in 2023-24. While this helps farmers in the short term, the long run is a different story.

The agriculture sector has been charging increasing prices for the goods it produces. While this should lead to an overall improvement in the finances of farm households, farmers face a rise in input costs as well. This results in very slow growth in net income, or the ‘profitability’ of farm households.

Further, as a recent study by the Reserve Bank of India shows (and which has been supported by similar studies in the past), farmers rarely get anywhere close to the full proportion of the price of food that is charged to the end-consumer, with the remainder taken away by traders and retailers further down the supply chain. According to a 2023 Niti Aayog study by Ramesh Chand and Jaspal Singh, the so-called terms of trade (effectively, the ratio of agricultural to non-agricultural prices) has moved sharply in favour of agriculture, and against industry. In layperson terms, this means that farmers earn higher prices for the goods they produce (agricultural produce), relative to what they have to spend on non-agricultural goods.