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Farmers’ average income grew 1.3-1.7x between FY18 and FY22, says SBI study

As the government grapples to meet its stated goal of doubling farmers’ income by 2022-23, a study by India’s largest bank, SBI, shows that between financial year 2017-18 and 2021-22, the average income of farmers rose by 1.3 – 1.7 times across India, while in some crops like soybeans in Maharashtra and cotton in Karnataka, incomes have in fact doubled during the same time.

The study, which comes barely days after the Center showcased success stories of farmers who have managed to double their incomes during the past few years, also said that the increase in income of farmers growing cash crops has been more than those growing non-cash crops between FY18 and FY22.

The SBI study is based on primary data of its agriculture portfolio across states, which contains granular data of various crops from agri-intensive branches and analyzes the change in income of farmers over the past five years.

“In principle, we have used a well-spread, well-represented, and probabilistic sample to estimate the change in income from FY18 to FY22 for all segments of farmers, large to small to marginal ones. Our statistical inferences using ‘t-test’ and ‘Ftest’ as also ‘Lorenz Curve’ probing increase in average income and diminution in inequality provide validity to our key findings,” the report said.

The SBI report added that income from allied and non-farm activities grew by a significant 1.4-1.8 times in line with the increase in farmers’ income during the same period.

“This substantiates the trend as per the 77th National Sample Survey that the source of farmer income has become increasingly diverse apart from crops,” the report said.

The Ashok Dalwai Committee on Doubling Farmers’ income set up by the Central government in its 14-volume report released a few years ago, had said that to double income from both farm and non-farm sources, it would have to grow by 10.4 per cent between 2015-16 and 2022-23 (the terminal year) in real terms (inflation-adjusted) and not nominally.

It had estimated the average annual income of an agricultural household in 2015-16 at Rs 96,703, which was projected to grow to Rs 1,72,694 by 2022-23, that is the end of the current financial year.

The SBI report also strongly criticizes farm loan waivers announced by various states and the Center during the past few years, saying the write-offs have failed to bring respite to the intended subjects, sabotaged credit discipline in select geographies and made banks/FIs wary of further lending.

“Essentially, (it is) a ‘self-goal’ influenced by the State on its subjects!” the report said.

It said since 2014, of about 37 million eligible farmers, only around 50 per cent received the amount of loan waiver (till March 2022), though in some states over 90 per cent of farmers received the debt waiver amount.

The report also said that Minimum Support Price (MSP), increasingly aligned with market-linked pricing, has been pivotal in ensuring better prices to farmers.

MSP has, in many cases, led to optimal price discovery, setting floor price benchmarks for many crop varieties (23 currently), and prompting farmers to gradually move over to crops that have better yield or value.

The report also praised the Kisan Credit Cards (KCC) scheme of the government, but wanted some tweaks in it.

It said the KCC scheme, continuously improved and revamped by the government, has been instrumental in bringing a large number of farmers (currently about 73.7 million active KCCs) under the ambit of a formal credit mechanism at subsidized rate of interest from institutional players.

However, current regulatory standards take too much of the banks’ time in renewing and expanding KCCs. If simplified, they could save a lot of time, which could be then reallocated for fresh lending.

SBI estimated that banks use about 2.3 million man days to renew KCC loans. This time could have been used for fresh lending to agriculture, if the norms were simplified.

It suggested a Livelihood Credit Card (LCC) encompassing a multi-purpose loan covering a rural household’s entire activities for ease of doing business.

“At least a million farmers could be targeted to start, (in a move) that would further reinvigorate rural demand,” the report said.

The study also called for state intervention to give tenancy certificates to tenant farmers to bring them into the formal credit system.

It had estimated that there are 20-30 million landless or tenant farmers in India based on its analysis of PM-KISAN and KCC beneficiaries.

“There is a gap between 117.8 million PM KISAN beneficiaries and 74 million farmers having KCCl,” the SBI report said.

Of the remaining 40-odd million farmer, at least 20-30 million could be tenants/lessees/landless farmers, the SBI study said.

The report also said NPAs of women-led Self-Help Groups (SHGs), which number over 800,000 in the country, is more than 10 per cent across India. Within this, certain states Uttar Pradesh, Haryana and Punjab have NPA ratios of over 25 per cent, while some like Andhra Pradesh, have the lowest ratio of 0.8 per cent.

Highlights of the SBI study

  • Average farmer’s income grew 1.3-1.7 times between FY18 and FY22
  • In some crops like soybean in Maharashtra & cotton in Karnataka, incomes doubled during this period
  • Non-farm income rose 1.4-1.8 times between FY18 and FY22
  • Incomes of farmers growing cash crops rose faster than those growing non-cash crops
  • Farmers loan waiver is ‘self-goal’ by states, as just 50 per cent farmers benefitted
  • India could have 20-30 million tenant farmers
  • The KCC scheme should be tweaked to make it a Livelihood Credit Card (LCC)
  • Self-Help Groups have around 10 per cent NPAs across India


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