Agriculture income may fall by 25 per cent due to climate change: Economic Survey

NEW DELHI: Agriculture income may fall by up to 25% in the medium term because climate change will hit crop yields, making it imperative to replace power and fertiliser subsidies by direct income support and to drastically expand irrigation, the Economic Survey said.

Agriculture accounts for 16% of gross domestic product and 49% of employment in India, making it crucial in the overall economy, the survey said. "Poor agricultural performance can lead to inflation, farmer distress and unrest, and larger political and social disaffection — all of which can hold back the economy."

In recent years, farmers have suffered because of erratic monsoon rains, unseasonal showers on the eve of harvest and volatile prices, which at times dipped below the support price because of large stocks and good harvests. Lower yields because of high temperature and low rainfall due to climate change will add to their distress.


The survey said the impact of climate change on agriculture was already visible. "The government’s laudable objective of addressing agricultural stress and doubling farmers’ incomes consequently requires radical follow-up action, including decisive efforts to bring science and technology to farmers, replacing untargeted subsidies (power and fertiliser) by direct income support, and dramatically extending irrigation but via efficient drip and sprinkler technologies," it said.

Industry leaders and experts welcomed the suggestions.

US Awasthi, the managing director of fertiliser cooperative Iffco, said the government should in the budget announce direct transfer of fertiliser subsidies to farmers instead of giving subsidies to the industry. "This will free the farmer to buy fertiliser according to his requirement. It will also help in propagating the balanced use of fertilisers and use of micro nutrients," he said.

The direct benefit transfer (DBT) for fertiliser subsidy was launched on a pilot basis in October 2016. Under this, the entire subsidy on various fertiliser grades is released to fertiliser companies on the basis of actual sales made by retailers to the beneficiaries.

However, Sukhpal Singh, the director-general at the Centre for Research in Rural and Industrial Development in Chandigarh, said DBT was relevant in areas where there was leakage of subsidies and where small farmers were unable to avail of it as in power subsidy and food subsidy.

The survey said certain crops faced a greater risk from climate change than others. "The clear pattern that emerges is that crops grown in rain-fed areas, pulses in both kharif and rabi, are vulnerable to weather shocks while the cereals, both rice and wheat, are relatively more immune."

It estimated that in a year when temperatures are 1 degree higher, farmer incomes would fall by 6.2% during the kharif season and 6% during rabi in unirrigated areas. Similarly, in a year when rainfall is 100 mm less than average, incomes would fall by 15% during kharif and by 7% during the rabi season.

"Applying IPCC-predicted temperatures and projecting India’s recent trends in precipitation, and assuming no policy responses, give rise to estimates for farm income losses of 15% to 18% on average, rising to 20-25% for unirrigated areas," the survey said. "At current levels of farm income, that translates into more than Rs 3,600 per year for the median farm household."