Protecting the Farmers


Agriculture is a key sector of the Indian economy in view of its contribution to employment and GDP. The agriculture sector contributes only about 18 percent of the total Gross Domestic Product (GDP), with more than 60% population dependence, resulting in low per capita income in the farm sector. Consequently, there is a large disparity between the per capita income in the farm sector and the non-farm sector. Therefore, it is essential to deal with those issues which impact the income levels of farmers.

National Mission For Sustainable Agriculture (NMSA)

National Mission for Sustainable Agriculture (NMSA) has been formulated for enhancing agricultural productivity, especially in rainfed areas focusing on:

  • Integrated farming
  • Water use efficiency
  • Soil health management 
  • Synergizing resource conservation.

Through the adoption of a sustainable development pathway by progressively shifting to environmentally friendly technologies, adoption of energy-efficient equipment, conservation of natural resources, integrated farming, etc, The NMSA will cater to key dimensions of:

  • Water use efficiency 
  • Nutrient Management
  • Livelihood diversification

Pradhan Mantri Krishi Sinchai Yojana (PMKSY)

The Government of India is committed to accord high priority to water conservation and its management. To this effect, Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) has been formulated with the vision of extending the coverage of irrigation ‘Har Khet ko pani’ and improving water use efficiency ‘More crop per drop’ in a focused manner with end to end solution on source creation, distribution, management, field application and extension activities.

Paramparagat Krishi Vikas Yojana (PKVY)

  • The Paramparagat Krishi Vikas Yojana (PKVY), an initiative to promote organic farming in the country, was launched by the NDA government in 2015.
  • According to the scheme, farmers will be encouraged to form groups or clusters and take to organic farming methods over large areas in the country.
  • The aim is to form 10,000 clusters over the next three years and bring about five lakh acres of agricultural area under organic farming. 
  • The government intends to cover the certification costs and promote organic farming through the use of traditional resources.
  • To avail of the scheme, each cluster or group must have 50 farmers willing to take up organic farming under the PKVY and possess a total area of at least 50 acres. Each farmer enrolling in the scheme will be provided INR 20,000 per acre by the government spread over three years time. 

Pradhan Mantri Fasal Bima Yojana (PMFBY)

Pradhan Mantri Fasal Bima Yojana (PMFBY) is a government-sponsored crop insurance scheme that integrates multiple stakeholders on a single platform.


  • To provide insurance coverage and financial support to the farmers in the event of failure of any of the notified crops as a result of natural calamities, pests & diseases.
  • To stabilise the income of farmers to ensure their continuance in farming.
  • To encourage farmers to adopt innovative and modern agricultural practices.
  • To ensure the flow of credit to the agriculture sector.

Gramin Bhandaran Yojna

The objectives of this Scheme:

  • Create scientific storage capacity with allied facilities in rural areas.
  • To meet the requirements of farmers for storing farm produce, processed farm produce, and agricultural inputs.
  • Promotion of grading, standardization, and quality control of agricultural produce to improve their marketability.
  • Prevent distress sales immediately after harvest by providing the facility of pledge financing and marketing credit by strengthening the agricultural marketing infrastructure in the country.


The biggest obstacle to increasing farmers’ income in India is the profiteering middlemen. Commission agents, traders, and wholesalers take a major chunk of profit from farmers’ produce. This leaves very little for the farmers. The Government of India introduced the Agricultural Produce Market Committee (APMC) Act in 1963- with the main focus on eliminating the exploitation of farmers by middlemen.

                          PROS                                CONS 
  • The Act provides licenses to authorized agents to promote the selling of farmers’ harvest.
  • Farmers can sell only through an auction in mandis.
  • Removed Middlemen and brought licensed agents.
  • The Act guarantees the establishment of regulated markets or ‘mandis’, wherein farmers could sell their produce at a reasonable price and in a transparent manner.
  •  Since agriculture is a state subject, the act empowered state governments to prescribe the quantities and producers of commodities as they deem fit, and designate markets and market areas where this regulated trade takes place.
  • Illiterate or semi-literate farmers, who are not market savvy and cannot comprehend the multiplicity of taxes in place, are at the disposal of a cartel of middlemen and agents in these markets who have a license to operate.
  • A state monopoly has been established over these markets since farmers are not allowed to sell their goods in the open market. These entry and operational barriers prevent competent outsiders from accessing these markets, enabling middlemen to entrench themselves further. 
  • In the absence of a direct link with the consumers, the farmers are at the mercy of the middlemen who occupy the entire space between the production and the ultimate sale of the produce.
  • Over and above the license fee, the rent of shops at these markets is quite high which prevents healthy and necessary competition which is a prerequisite to maintaining quality and reasonable prices. In most places, only a group of village/urban elite operate in APMC. 

The Model legislation which came into being in 2003 to make APMCs more transparent has actually given rise to a conflict of interest, as the APMC, which is the operator, is also the regulatory authority. There is reluctance on part of state governments to reform the APMC legislation, as it generates huge revenues. Some states have created additional entry barriers by prescribing either high license fees for setting up such markets or minimum distance between private markets and APMC markets.


Presently, the supply chain should be shortened to bring the producers as close to consumers as possible. Too many intermediaries can be a deterrent to a farmer, leaving them with an unfairly small return on their produce.

Additionally, better storage facilities would help build a farmer’s ability to store their products as per the demand. In situations where a farmer knows that a few days or weeks down the line s/he is going to get a better price for her/his produce but is yet unable to store his/her grains in part due to the lack of adequate storage facilities in addition to the many restrictions which prevent such activities.

Farm Bill 2019

The government of India introduced the new Farm Bill in the month of September in 2019, which received heavy backlash from the farmers due to the reason that they believed the government was trying to privatize agriculture by eliminating the agents, who are a vital cog of the farm economy and for thousands of farmers, the main line of credit.

Pros of the Farm Bill:

  • The laws enacted by parliament in September are aimed at linking potential bulk buyers, such as WalMart Inc, Reliance Industries Ltd and Adani Enterprises Ltd , directly with farmers, bypassing government-regulated wholesale markets and layers of commission agents.
  • According to the farmers, the middlemen provide quick funds for seeds and fertilisers, and even for family emergencies. The agents also help grade, weigh, pack and sell harvests to buyers. 
  • In the existing APMC system, it is mandatory for farmers to go through a trader (via Mandis) so as to sell their products to consumers and companies and they receive Minimum Selling Prices for their produce. It was this very system that has influenced the rise to a cartel led by traders and uncompetitive markets due to which the farmers are paid MSP (a very low price) for their produce.

Cons of the Farm Bill:

  • Farmer unions in Punjab and Haryana say the recent laws enacted at the Centre will dismantle the minimum support price (MSP) system. Farmers fear that with the virtual disbanding of the mandi system, they will not get an assured price for their crops and the “arthiyas” — commission agents who also pitch in with loans for them, will be out of business. 
  • The Farm Bill hampers the monopoly of APMC (agricultural produce market committee) mandis, thereby allowing sale and purchase of crops outside these state government-regulated market yards or mandis.
  • The farmers also worry that after initially paying good returns for their produce, corporate buyers could force down prices. They are upset the government will not commit in writing to continue a decades-old price support policy for staples such as wheat and rice. 

After a lot of protests from the farmers, Prime Minister Narendra Modi rolled back the three farm laws, saying his government, despite his best efforts, could not explain to a section of farmers that the laws were in the larger interest of the community. The government will repeal the laws in the upcoming winter seasons.


In Maharashtra, 88.46% of rural women are employed by agriculture, the highest in the country. In western Maharashtra’s Nashik district, women own only 15.6% of the agricultural landholdings, amounting to 14% of the total cultivated area, as per the Agricultural Census of 2015.

Land transfer in India occurs mainly through inheritance and this is mediated through a series of religion-centric personal laws. As per the Hindu Succession Act (HSA), after a male Hindu’s death, the land has to be divided among the widow, the mother and the children of the deceased. HSA is also applicable to people following Sikhism, Buddhism or Jainism.

Muslim women under the Muslim personal law get one-third of the share in property, while men get two-thirds. This is not applicable to agricultural land, except in some states. As per the Indian Succession Act, 1925, Christian widows will get one-third of the property while the remaining two-thirds will be divided equally between the children of the deceased.

Despite the legal rights, social and cultural forces deny women ownership of land.

Women’s access to government schemes and other facilities is curtailed when the land they till is not in their name. The National Policy for Farmers, 2007 recommends a broader definition of a farmer, including labourers, tenants, and other workers, but the government’s definition is based on ownership of land. 

The revenue department defines a farmer based on the land title records and the agriculture department follows the revenue department’s definitions. Hence, most of the schemes require the submission of land title records, limiting the beneficiary base to landowners. Access to institutional credit is also limited with no land ownership. The only funding options available to women with no land are self-help groups (SHG) and microfinance.  

Public and private banks do offer financial products designed especially for women. For example, both Self-Help Group (SHG) lending and microcredit lending by Microfinance Institutions (MFIs) have seen unprecedented growth in enrolling women clients in recent years.  However, not all women from India have access to these services.

Today, many state governments have adopted the default savings options by mandatorily delivering all wages to participants of government schemes and programmes through formal saving accounts. For example, the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) states that at least one-third of its beneficiaries should be women and their payments should be delivered via electronic transfers to bank accounts. Additionally, the government allows SHGs to mobilise savings, where a group of women come together and save on a regular basis. Despite these efforts, institutional savings by women in India are low. Only 13% of total deposits (savings) held at scheduled commercial banks belong to women (RBI 2013).


Agricultural income in India is categorised as a valid source of income and basically includes income from sources that comprise agricultural land, buildings on or related to an agricultural land and commercial produce from an agricultural land. This income is considered for rate purposes while calculating the income tax liability of an individual.

Section 2 (1A) of the Income-tax Act details the conditions wherein sources can be considered to be generating agricultural income. The section’s definitions basically point out the following as the sources for agricultural income –

  1. Revenue generated through rent or lease of a land in India that is used for agricultural purposes
  2. Revenue generated through the commercial sale of produce gained from an agricultural land
  3. Revenue generated through the renting or leasing of buildings in and around the agricultural land subject to the following conditions:
  • The cultivator or farmer should have occupied the building, either through rent or revenue.
  • The building is used as a residential place, storeroom, or outhouse.
  • The agricultural land or the land where the building is located is being assessed for land revenue or subject to a local rate assessed.

A few exclusions to this income will be as follows –

  1. Revenue from sale of processed produce of agricultural nature without actual agricultural activity
  2. Revenue from extremely processed produce
  3. Revenue from trees that have been sold as timber

Key points to remember while considering if an income is actually a valid agricultural income –

  1. Income should be from an existing piece of land.
  2. Income should be from a piece of land that is used for agricultural operations.
  3. Income should stem from produce achieved after cultivation of the land.
  4. Income can be from a land that is not under the assessee’s ownership.
  1. Are farmers exempted from income tax?

Currently, farmers in India are exempted from paying income tax to the government.

  1. Is agricultural income fully exempt from tax?

Under Section 10(1) of the Income Tax Act, 1961, any income generated from any agricultural activities are exempted from being taxed by the Government. However, agriculture income can be considered for rate purposes provided the net agriculture income is more than Rs.5,000 from the previous, and the total income minus the agricultural income exceeds the basic exemption limit which is Rs.2.5 lakh for a person below the age of 60 years and Rs.3 lakh for an individual aged 60 years and above.


The payment in cash, kind, or both for agriculture or allied activities to a labourer who works in agriculture year-round or seasonally is called agricultural farm money, or nominal wage.

The wage rates for agricultural and non-agricultural operations are provided by the Labour Bureau of the Ministry of Labour and Employment, Government of India. The average daily wage rates are collected from 11 agricultural and 7 non-agricultural operations. 

In India, most labourers and their families work on farms, and they depend on agricultural wages for their livelihood. The percentage of labourers employed in wage-related activities rose from 45.6% in 2001 to 54.9% in 2011 (GoI 2016). The green revolution in the mid-1960s boosted agricultural growth, and studies on the trends in agricultural wages assumed significance.

Much research has been conducted on the issues of the rising trend in wages and labour scarcity, and also on the factors affecting rising wages, especially after the launch of the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) on 1st of April 2008. The MGNREGA provides a legal guarantee for one hundred days of employment in every financial year to adult members of any rural household willing to do public work-related unskilled manual work at the statutory minimum wage.  

  • The rising trends in real wages are an important indicator of the welfare of the wage-dependent population, but dimensions such as sectors (farm and non-farm), operations (ploughing, sowing, and harvesting), and gender (male and female) need to be explored, and the spatial dimension of wages too needs investigation— given the country’s large size and the variation in economic development.
  • Other key factors of the agricultural wage are irrigation, mechanization, yield, and cropping intensity.
  • The increase and variation in rural wages is influenced by non-agricultural factors such as the presence of trade unions, non-farm employment, and per capita income (Vaidyanathan 1986; Jose 1988).



First, the government must move away from a production-centric approach to a market-centric one. Experience shows that increased production of agricultural commodities does not guarantee enhanced income for farmers even in highly irrigated areas.

Second, the mere announcement of MSPs will not help farmers unless procurement infrastructure is strengthened. The procurement level in most crops (except paddy and wheat) is poor, which is evident from SAS data as well. Therefore, it is necessary to procure 20-25 percent of production in each mandated crop to benefit the farmers.

Through the PM-AASHA scheme, the Centre provides incentives to States for three schemes —

  1. Price Support Scheme (which promises to provide an assured price for farmers and protect them from making distress sales during bumper harvest).
  2. Price Deficiency Payment Scheme (which provides compensation when market prices go below MSP).
  3. Private Procurement Stockist Scheme (which allows the entry of private players in the procurement of oilseeds on a pilot basis). State governments must implement these schemes with full vigour for the benefit of the farmers.

Farmer-managed markets in States such as Tamil Nadu and Andhra Pradesh are a win-win for farmers and consumers. Therefore, producers’ markets should be encouraged throughout the country to improve farm income and eliminate middlemen as underlined in the National Agricultural Policy of 2000.

To protect the farmers from distress sale during periods of glut, swift action should be taken through ‘Market Intervention Scheme’ (MIS), as suggested by Expert Group Committee on Indebtedness chaired by Prof Radhakrishna (2007). Besides price incentives and market support, there is also a need to reduce the cost of cultivation which is pulling down farm income growth.