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There may be a ‘feel good’ mood in the country, but India’s farmers are certainly not seeing the benefits.

Data compiled by economists working for the ministry of agriculture indicates that farm income in real terms -- when adjusted for inflation -- has slumped over the past five years.

While real income in the same period may have risen in urban areas, the countryside presents a sad picture. For instance, rice farmers in Bengal currently earn 28% less in real terms, compared to 1996-97; their counterparts in Uttar Pradesh get an income that is 9% less than what it was, for the same period. Likewise, wheat farmers in north India have seen their real income eroded by 10%, within the same period.

The data paints an even worse picture for the sugar sector. The real income of sugarcane farmers in western Uttar Pradesh has declined by nearly 32%; in the Marathwada region of Maharashtra it has slumped by a whopping 40%.

North Indian farmers are unhappy with the union government on a number of counts ranging from a freeze on wheat and rice procurement prices to the perception that the government is selling out at global trade talks. “Opening up to the world and international competition are the key factors for the fall in real farm income,” says B B Bhattacharya, head of the Institute of Economic Growth, a government think-tank.

Inflation, with rising prices of industrial products such as steel, cement, power and fertilizers, without a comparable increase in food prices, has brought about a drop in farmers’ living standards. Because of a policy that relies on subsidies, not investment, agriculture growth has steadily declined. This, again, depresses the income of 70% of the population.

The government, meanwhile, has claimed credit for bumper harvests and for the highest-ever prices being paid to farmers for their crops by the official grain-buying agency, the Food Corporation of India (FCI). The FCI buys as much as 85% of the grain produced in north India. A freeze on prices means that farm incomes do not go up because of an increase in input costs.

Source: The Telegraph, March 1, 2004