By R. Suryamurthy
By any reasonable political measure, the promise to double farmers’ incomes was one of Narendra Modi’s most consequential commitments. Announced with flourish in the early years of his first term, it sought to reframe India’s agrarian question—not as one of chronic distress to be periodically managed, but as a problem of income generation that could be decisively solved within a decade. Ten years on, as the Union Budget for 2026–27 approaches, the numbers tell a far less flattering story.
A recent policy brief by the Indian Council for Research on International Economic Relations (ICRIER) offers perhaps the clearest post-mortem yet of this promise. Its findings are not sensational. That is precisely the problem. India’s average agricultural household earned an estimated ₹19,696 per month in 2024–25, adjusted from the latest available Situation Assessment Survey (SAS) data. In nominal terms, this represents a threefold rise from ₹6,426 in 2012–13, the last benchmark year before Modi assumed office. But once inflation is accounted for, real monthly income has risen from roughly ₹12,173 to ₹19,696 over the past decade—an increase of about 62%, not a doubling.
For a slogan that shaped an entire political narrative around rural uplift, this shortfall is not a rounding error. It is a structural failure.
The government can point, correctly, to steady agricultural growth. Between 2014–15 and 2024–25, agriculture grew at an average annual rate of about 4.02%, respectable by historical standards and sufficient to maintain food security for a growing population. But this growth pales in comparison to overall GDP expansion of over 6% during the same period. The divergence matters because agriculture still employs about 46% of India’s workforce. When nearly half the labour force is tied to a sector growing significantly slower than the rest of the economy, income convergence is arithmetically implausible.
The result is a rural economy stuck in a low-income equilibrium. According to the Household Consumption Expenditure Survey (HCES) 2022–23, self-employed agricultural households spent an average of ₹3,701 per person per month—below the rural average of ₹3,773 and far below urban spending of ₹4,534. This weak consumption base persists despite a decade of income-support measures, from PM-KISAN cash transfers to expanded fertiliser subsidies and MSP-backed procurement.
In other words, farm incomes have risen, but not to a level that meaningfully alters demand patterns. The political messaging has run far ahead of the economic reality.
What makes this failure more striking is that the pathways to higher incomes are no longer obscure. The ICRIER study documents a decisive shift in the composition of farm incomes—one that policy has been slow, and often reluctant, to follow. Income from crop cultivation, long treated as the moral and fiscal centre of Indian agriculture, has declined from 46% of total farm income in 2002–03 to just under 39% by 2018–19. In contrast, livestock income has risen sharply, from a marginal 4% to nearly 16% over the same period. Wage income now accounts for over 40%, a reminder that for millions of small and marginal farmers, agriculture alone no longer provides a viable livelihood.
The regression results in the ICRIER brief are unambiguous. Farmers with livestock earn, on average, 86.2% higher incomes than those without. Those who diversify into horticulture earn between 25% and 56% more, depending on the share of land allocated to high-value crops. Education matters: farmers with secondary education earn 57% more than those without. Irrigation matters: a 1% increase in irrigation intensity raises income by 8%. Participation in farmer producer organisations (FPOs) lifts incomes by nearly 17%.
This is not ideological argumentation. It is empirical evidence.
Yet budgetary priorities continue to reflect an older political economy. In FY26, livestock and fisheries together account for just 2.35% of central government spending on agriculture and allied activities, including fertiliser subsidies. This is despite the fact that livestock has emerged as the single most powerful driver of income growth in Indian agriculture. The bulk of public spending remains tied up in fertiliser subsidies, cereal procurement and price interventions that stabilise output but do little to alter income trajectories.
This mismatch is not accidental. It reflects the enduring political logic of visibility. MSP hikes, procurement announcements and subsidy extensions are legible, immediate and electorally salient. Investments in cold chains, veterinary services, processing capacity or farmer collectives are not. They require coordination, regulatory reform and patience—qualities rarely rewarded in India’s electoral cycle.
The cost of this inertia is most visible in horticulture. Fruits, vegetables, flowers and spices now account for a growing share of agricultural output, with tomato, onion and potato (TOP) alone contributing over 20% of the value of horticultural production in recent years. Yet inadequate cold storage, weak processing capacity and poor logistics expose farmers to extreme price volatility and post-harvest losses. Each price crash erodes the very income gains diversification promises to deliver.
Insurance mechanisms have failed to keep pace. Schemes such as the Pradhan Mantri Fasal Bima Yojana (PMFBY) remain largely crop-centric, offering limited coverage for horticulture and livestock, even as climate variability intensifies. Delayed payouts and narrow risk definitions further undermine confidence. The message to farmers is contradictory: diversify to earn more, but bear the risks largely on your own.
This is where the political reckoning becomes unavoidable. The Modi government did not merely inherit a broken agricultural system; it chose to anchor its rural narrative in a specific, time-bound income promise. That promise raised expectations—and reshaped voter perceptions of what constituted success. Managing distress through cash transfers is not the same as delivering income transformation.
As the Union Budget for 2026–27 approaches, the choices facing Finance Minister Nirmala Sitharaman are stark. The ICRIER brief does not argue for a dramatic increase in headline agricultural spending. Instead, it calls for reorientation—a shift away from output-centric subsidies towards capital investment in livestock, horticulture value chains, irrigation, processing infrastructure and farmer collectives. In economic terms, the multipliers are clear. In political terms, the trade-offs are uncomfortable.
Rebalancing away from cereals challenges entrenched procurement systems. Scaling back fertiliser subsidies risks backlash from both farmers and industry. Prioritising livestock and horticulture demands regulatory capacity that states often lack. But without such a pivot, the promise of doubling farm incomes will remain what it already is: a slogan retrospectively defended through selective arithmetic.
A decade after 2014, the failure is not one of neglect but of ambition mismatched with method. India’s farmers are better off than they were ten years ago. That is undeniable. But they are not prosperous enough to power rural demand, stabilise manufacturing growth or fulfil the political promise that once animated the countryside.
The danger now is complacency. If incremental gains are presented as mission accomplished, the next decade risks repeating the same pattern—steady growth, modest income gains, and a widening gap between political claims and economic outcomes. The ICRIER data make one thing clear: India knows how farm incomes rise. The unresolved question is whether the political will exists to follow the evidence, rather than the optics.
As Budget 2026–27 looms, the real test is not fiscal generosity, but honesty. Doubling farm incomes may no longer be feasible as a slogan. Designing policy that genuinely raises them still is. (IPA Service)
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