Doubling Farmers’ Incomes: Issues and Strategies for Tamil Nadu

This study assesses the current income levels of farmers and existing strategies for income increment in rural Tamil Nadu and provides actionable items and policy recommendations in accordance with Tamil Nadu government’s objective of doubling farmer’s incomes.

Background
Agriculture and allied sectors play a vital role in the economy of Tamil Nadu, with around 42% of the state’s workers relying on cultivation or agricultural wage labour. Overall, the sector accounted for 11.6 percent of the Gross State Value Added (GSVA) in 2016-17. With just about 3% of India’s freshwater sources, Tamil Nadu is also a highly water constrained state. The state has particularly been vulnerable over the last decade to multiple weather shocks. Acknowledging the importance of the agricultural sector to both household economies and the state economy, the TN State government has declared “Doubling Yield, and Tripling Income” as its goal for agriculture in the TN Vision 2023 document. Its objective is to ensure that the benefits of economic growth are made available to one and all, including farmers and the rural poor. In this context, understanding current income levels of farmers in the state is particularly important, as this provides a benchmark to assess the progress so far, and understand the necessary actions and focus areas that needs to be prioritised.
Approach
The study utilizes a mixed-methods approach, comprising of both quantitative and qualitative methods. Quantitative data was collected through well designed survey instruments and qualitative data collected through focus groups and stakeholder discussions etc. The household survey sample comprised of 854 households, spread across four sample districts in four agro-climatic zones of Tamil Nadu. Respective blocks and districts for the study were selected based on relevant indicators such as ground water potential and irrigation intensity, per capita income indicators and contribution of agriculture towards the District Domestic Product.

Findings

Results from the study indicate that there has been a decrease in farmers’ real income in Tamil Nadu in 2016-17, mainly due to the multiple weather shocks, and related issues. Considering the Doubling Farmer’s Incomes Committee’s target as the benchmark that has to be achieved in the next 5 years (by 2022-23), the implication is that farm based incomes have to increase by 134% from the current level, assuming that the share of farm income in the total income basket is around 55%. At the same time, this also places the demand of an annual 7% growth in non-farm incomes during the period 2017-18, which is slightly higher than the DFI committee’s estimate of 5% for the longer 7-year duration.

Implications
At current income levels, a substantial amount of coordinated effort, across various stakeholders and government agencies is necessary over the next 5 years to double farmers’ incomes in Tamil Nadu. For small and marginal farmers in particular, it seems unlikely that focusing on off-farm income sources can significantly contribute to accelerating farmers’ incomes. Insights from the study also list suggestions for long term and short term strategies to meet the goal set by the government of Tamil Nadu.

Thematic area

Financial Inclusion

Project Leads

Ajaykumar Tannirkulam, Suraj Nair

Location

Tamil Nadu

Partners

NABARD

Status

Completed