When 86% of Farmers Earn Less Than a Family Dinner, Can Indian Agriculture Survive?

For decades, Indian agriculture has been described as the backbone of the nation, and farmers as the people who feed 1.4 billion citizens. Yet behind celebratory narratives of record foodgrain production, bumper harvests, and rising export figures lies a quieter and far more uncomfortable truth: farming in India is no longer a reliable pathway to a dignified or sustainable livelihood. The lives of millions who cultivate the land tell a story far removed from the numbers that headline economic surveys.

Income Reality Behind the Agricultural Success Story

According to NABARD’s latest All India Rural Financial Inclusion Survey (NAFIS 2021–22), the average agricultural household in India earns Rs 13,661 per month from all sources. Out of this, only Rs 4,476 comes from cultivation, roughly Rs 150 a day, with average savings of Rs 1,951 per month (about Rs 65 a day) after expenses. Put simply, the people who grow our food earn less from farming each day than what many urban households spend on a single dinner out.

The structural distress becomes clearer when viewed against debt and cost trends. The NSO’s Situation Assessment of Agricultural Households (2019) found that over 50% of agricultural households are indebted, with average outstanding loans reaching Rs 74,121 and much higher in states such as Punjab and Kerala. Meanwhile, the Commission for Agricultural Costs and Prices (CACP) shows input costs for fertiliser, labour, diesel and pesticides have risen 25–30% between 2018 and 2023, further eroding thin margins. When incomes are adjusted for inflation and rising cultivation costs, the gains appear even weaker.

At the same time, agriculture still supports 42–46% of India’s population, while contributing only 16–18% to GDP, according to the Economic Survey and official estimates. This imbalance reveals a quiet structural crisis at the heart of India’s rural economy. As NABARD and NSS data indicate, between 86% and nearly 90% of agricultural households operate on less than 2 hectares of land – the small and marginal farmers who feed the nation, yet earn below unskilled minimum wage levels in many states.

The question for the next two decades is blunt:

When 86% of farmers earn less than a family dinner from cultivation, can Indian agriculture survive in its current form?

Current policy architecture: abundant schemes, thin margins

Over the past seven decades, India has introduced layers of agricultural reforms, support schemes, and risk-protection mechanisms, including:

• Price support: Minimum Support Price (MSP) procurement for select crops.
• Risk protection: Pradhan Mantri Fasal Bima Yojana (PMFBY).
• Income support: PM-KISAN direct transfers.
• Employment support: MGNREGS for rural wage work.
• Productivity support: fertiliser subsidies, irrigation schemes, Soil Health Cards, extension.
• Market and institutional reforms: e-NAM, FPO promotion, AgriStack / IDEA as digital public infrastructure.

On paper, incomes seem to have grown – rising 53% from Rs 8,931 per month in 2016–17 to Rs 13,661 in 2021–22 – but much of this gain is eroded when adjusted for inflation, rising input costs and household expenditure. More importantly, the increase comes from non-farm sources rather than cultivation, which continues to generate meagre and unstable returns.

So while overall rural income has grown, agriculture as an occupation remains structurally underpaid.

Policies have largely focused on:

• raising production,
• stabilising prices, or
• compensating for losses,

rather than guaranteeing a dignified, predictable income trajectory for small and marginal farmers.

Future trends: what the next 10-20 years will throw at Indian agriculture

A future-centric lens shows that the coming decades will be even more demanding than the past.

Climate volatility and yield risk

IPCC assessments and India-specific climate studies point to more frequent heatwaves, erratic monsoons, intense rainfall events, and drought spells. This will increase yield variability, especially in rain-fed regions that already account for a large share of cropped area.

Water stress and groundwater depletion

Around 80% of India’s freshwater is used in agriculture, and groundwater levels are declining in key “Green Revolution” states such as Punjab, Haryana and parts of Maharashtra. By 2040, water availability may become the binding constraint for crop choices and yields.

Fragmenting landholdings and ageing farmers

Agriculture Census 2015–16 shows that 86.08% of landholdings are small and marginal (below 2 hectares), a share that has risen over time. NSS 77th round data suggests 89.4% of agricultural households now own less than 2 hectares. As holdings shrink further and younger generations seek non-farm livelihoods, small farms will struggle to be viable without structural support.

Slowing agricultural growth

The Economic Survey notes that agriculture grew 4.2% annually over the last five years, but slowed to 1.4% in 2023-24 due to poor monsoons and weather shocks. Low growth, low yields, and low prices are a dangerous combination for already thin farmer margins.

Rapid technology shifts

On the opportunity side, advances in:

• satellite remote sensing and AI yield models,
• IoT-based soil and moisture sensors,
• digital platforms for credit, insurance and markets,

can fundamentally alter how risk, information and value are distributed in agriculture. Schemes such as Pradhan Mantri Fasal Bima Yojana (PMFBY) are already experimenting with technology pilots for yield assessment and claim settlement.

The key question is: will policy harness technology to raise farmer incomes, or simply to better administer low-income farming?

A closer look at risk: PMFBY as a case study in unrealised potential

The Pradhan Mantri Fasal Bima Yojana (PMFBY), launched in 2016 to replace earlier schemes such as NAIS and MNAIS, was envisioned as a transformative overhaul of India’s crop insurance architecture, aiming to correct long-standing issues like low claim ratios, slow settlement, and high premiums, and to protect farmers against crop losses arising from natural calamities, pests and diseases while ensuring timely financial relief.

On paper, this is impressive. But disaggregated data and state experiences tell a more complex story:

• A Lok Sabha reply notes that between 2022-23 and 2024-25 (up to Kharif 2024), claims of about Rs 50,475 crore were reported under PMFBY, of which Rs 45,192 crore had been paid, while about Rs 5,282 crore were still pending for 92.6 lakh farmer applications.
• In Maharashtra, a recent analysis found that between 2016-17 and 2023-24, insurance companies collected around Rs 52,969 crore in premiums but paid only around Rs 36,350 crore in claims – a gap of roughly 45%. During that period, 12.8 crore farmers enrolled, but only 6.2 crore received compensation.

These numbers do not suggest PMFBY is irrelevant; they suggest a scheme caught between design ambition and operational reality. Without faster, more transparent, more accurate claim settlement and better alignment of insurer incentives, crop insurance risks becoming another line item in the budget, not a robust income-stabilising tool.

For a farmer earning Rs 4,476 a month from cultivation, delayed or partial payouts are not a technical glitch; they are the difference between staying on the land and slipping into debt or distress migration.

Countries such as Israel, Netherlands and Brazil have boosted farm incomes not only through subsidies but through technology-enabled advisory systems, strong cooperatives, assured markets and value-added exports. India’s challenge is not productivity alone but transforming value distribution.

Beyond Schemes: Missing Dimensions of Capacity, Collaboration and Value-Chain Strengthening

While policy discussions often focus on scheme performance, it is equally important to account for the significant financial burden borne by governments. Since PMFBY’s inception, the Centre and States together have spent thousands of crores annually on premium subsidies and administrative support to keep farmer premiums low. As climate risks intensify and claims rise, states have already expressed concern over escalating fiscal pressure, occasionally leading to delayed participation or withdrawal. This underscores the need to evaluate crop insurance not only as a farmer welfare instrument but also as a sustainable public finance mechanism.

Another critical but underemphasised aspect is farmer training and capacity-building. Without strengthening extension systems, digital literacy, and climate-smart agronomic skills, even the most advanced schemes and technologies cannot deliver intended outcomes. India’s public extension workforce remains thin, and partnerships with universities, Krishi Vigyan Kendras (KVKs), and agri-tech innovators require far greater investment and coordination.

The role of other stakeholders beyond government – especially the private sector, producer-owned organisations (FPOs/PSOs), cooperatives, processors, retailers and agri-startups – is central to future agricultural transformation. These actors are key to building competitive value chains that can improve price realisation, provide market access, enable storage and processing, and reduce post-harvest losses.

Income diversification is another major missing link in India’s agricultural transformation strategy. Post-harvest value addition, cold storage, food processing, rural warehouses, logistics infrastructure, and branding are essential to shift farmers from low-value commodity sales to higher-margin market participation. Studies indicate that post-harvest losses in perishables alone account for 4.6–15.9% annually, representing a significant loss of potential income. If supported with infrastructure and credit, diversification into processing, horticulture, fisheries, animal husbandry, and agri-tourism can provide resilient year-round earnings and reduce dependence on a single cropping season.

Where current policy falls short for the future

Looking ahead, several gaps stand out if policies continue largely “as is”:

1. Compensation, not prevention

Most schemes, including PMFBY, react after loss. In a climate-stressed future, waiting for loss and then compensating will become fiscally and politically untenable.

2. Fragmented data and weak targeting

Despite efforts like AgriStack and the Open Government Data platform, rural data systems are still fragmented across ministries, states and schemes. This reduces the ability to target support to the most vulnerable smallholders.

3. Misaligned incentives

• Insurers may benefit in low-loss years when premiums are high.
• States face rising subsidy burdens.
• Farmers lack full visibility into how premiums and claims are calculated.

4. Exclusion of the most vulnerable

Women constitute 33% of cultivators and 45% of agricultural labour, yet own only 12% of land, restricting access to credit, insurance and institutional support. Similarly, sharecroppers and tenant farmers, who form a sizeable but undocumented segment, remain outside most schemes tied to land records or formal documentation.

5. Limited focus on value addition and market power

Policy remains heavily tilted towards input subsidies and support prices, and less towards:

• diversification into higher-value crops,
• processing and storage,
• farmer collectives with real bargaining power.

If these gaps persist, India risks an agricultural system where productivity statistics look respectable, but farmers’ lives do not.

What would a future-ready policy architecture look like?

To make agriculture survivable – and dignified – for small and marginal farmers, the next 10–20 years require a shift from piecemeal schemes to an integrated farmer income security framework.

a) PMFBY 2.0: from insurance to climate-risk platform

• Universal adoption of tech-enabled yield estimation (satellite, drones, smart CCEs) to reduce disputes and delays.
• A hybrid area + individual loss assessment model using geo-tagged farm boundaries.
• Real-time public dashboards showing premiums collected, claims approved, settlement times and rejection reasons by district.
• A Centre–State climate risk pool, where extreme, multi-year events are treated not as scheme failures but as shared national shocks.

b) A digital backbone for farmer income

Link existing infrastructure – AgriStack, e-Shram, Jan Dhan, Kisan Credit Cards, Soil Health Cards, e-NAM, FPO registries – into an interoperable “Farmer Income Stack” that supports:

• tailored crop and risk advisories,
• dynamic credit scoring,
• targeted income transfers in shock years,
• market and logistics support to reduce post-harvest losses.

c) From crop output to household income

Policies must move from an obsession with tonnes of grain to making sure households earn a livable income:

• Set explicit, measurable national targets: e.g.,
  • double real farm household income by 2035,
  • raise cultivation’s share of household income from ~33% to at least 50–60%,
  • ensure no agricultural household falls below a basic income floor.
• Expand income-support instruments like PM-KISAN and state schemes in a more progressive, better-targeted way, using high-quality data.

d) Strengthening non-farm rural opportunities

NAFIS shows that a growing share of rural income now comes from salaried jobs and non-farm enterprises. Future rural policy must consciously:

• support rural manufacturing, services, food processing,
• help farm families diversify income sources without forcing permanent distress migration, and
• invest heavily in education and skills in rural regions.

e) Governance and accountability reform

• Independent data and performance audits of major schemes like PMFBY.
• Time-bound grievance redressal for farmers, with appeal and review at district and state levels.
• Public ranking of states on farmer income indicators, not just production indicators.

A forward-looking conclusion: survival, dignity, and the next decade

The latest NABARD survey tells us that between 2016–17 and 2021–22, the average monthly income of agricultural households rose from Rs 8,931 to Rs 13,661. That sounds encouraging – until we see how little of that comes from cultivation, and how little is left as savings at the end of the month.

Behind those numbers are millions of farmers making decisions every season:

• whether to sow or to sit out,
• whether to take another loan,
• whether to send a child to college or to the city for work,
• whether to stay with farming at all.

If the next 10–20 years bring more climate shocks, more water stress, more market volatility – and policies change only at the margins – many of those decisions will tilt away from agriculture.

Indian agriculture can survive, and even thrive, but only if policymakers accept three uncomfortable truths:

1. Production without prosperity is not success.
2. Schemes without accountability do not build trust.
3. Technology without inclusion will deepen, not solve, inequality.

When 86% of farmers earn less than a family dinner from the very activity that feeds the nation, the issue is no longer just “agricultural policy”. It is about the kind of economy and society India wants to build.

The next decade must be about redesigning agriculture so that:

• risk is shared fairly,
• incomes grow predictably, and
• farming once again becomes a viable, respected livelihood – not an act of quiet sacrifice.

Only then can we honestly say that Indian agriculture is not just surviving, but secure.

References

• Commission for Agricultural Costs and Prices. (2023). Price Policy for Kharif Crops: The Marketing Season 2023–24. Ministry of Agriculture & Farmers Welfare, Government of India.
• Economic Survey of India. (2024). Chapter on Agriculture and Rural Development. Ministry of Finance, Government of India.
• Government of India. (2024). Lok Sabha Unstarred Question No. XXXX: Status of PMFBY Claims and Settlements. Ministry of Agriculture & Farmers Welfare.
• IPCC. (2023). Climate Change 2023: Impacts, Adaptation and Vulnerability. Intergovernmental Panel on Climate Change.
• Ministry of Agriculture & Farmers Welfare. (2025). Pradhan Mantri Fasal Bima Yojana: Scheme Progress Report (2016–2025). Government of India.
• National Bank for Agriculture and Rural Development. (2022). All India Rural Financial Inclusion Survey (NAFIS 2021–22). NABARD.
• National Statistical Office. (2021). Situation Assessment of Agricultural Households and Landholding Survey 2019. Ministry of Statistics and Programme Implementation, Government of India.
• NITI Aayog. (2021). Doubling Farmers’ Income—Rationale, Strategy and Action Plan. Government of India.
• World Bank. (2024). India Country Climate and Development Report. Washington, DC: World Bank Group.