In a bid to win back the support of disgruntled farmers ahead of general election due in April-May, the Narendra Modi government on Friday announced an income support scheme for small farmers as a key promise in its final budget.

Finance minister Piyush Goyal assured farmer households a direct income transfer of 6,000 per year and said the first instalment of 2,000 will reach them soon.

Admitting the stress in farm incomes from a fall in global and domestic food prices, the finance minister said in his budget speech that the Pradhan Mantri Kisan Samman Nidhi, or PM-Kisan scheme, will help 120 million farmer families live with respect, besides helping pay for cultivation costs and reducing debts. According to Goyal, the PM-Kisan scheme will cost 20,000 crore in 2018-19, and 75,000 crore in 2019-20. Small and marginal farmers who own less than five acres of land will receive three instalments of 2,000 each every year. The scheme will cover 86% of all farm households in India. “The budget (announcements) will empower the poor, give a boost to the farmers and an impetus to economic growth," Prime Minister Narendra Modi said in a statement.

“The government’s hope of doubling farm incomes with a meagre financial support shows how removed it is from the reality... the average cost of farming in an acre is about 25,000... a 2,000 crore bank transfer before elections is like bribing the rural voter," said Kiran Vissa, a farmer activist from Hyderabad, and member of the All India Kisan Sangharsh Coordination Committee, an umbrella coalition of around 200 farm unions.

While an income transfer scheme was widely anticipated following the defeat of the Bharatiya Janata Party in the recently held state elections where agrarian distress and the lack of jobs were major issues, PM-Kisan signals an alternative approach toward supporting farmers, moving away from price support interventions. In the recent past, several states have launched their own farm income support schemes—for instance, 8,000 per acre per year in Telangana and 10,000 per farmer family per year in Odisha.

“With an income transfer of 16 per day per family, this is not a Kisan Samman (honour) but a Kisan Apman (insult) Yojana," said Himanshu, associate professor of Economics at Jawaharlal Nehru University, Delhi. “By maintaining a status quo on funding of other scheme like employment guarantee and rural roads, the government has left out agricultural labourers and tenant farmers who are the worst hit. An income transfer is an immediate palliative which comes at the cost of public investments in agriculture," he added.

Numbers from the budget show that allocation for the agriculture ministry rose from 57,600 crore in 2018-19 (budget estimate) to 1.41 trillion in 2019-20, the increase largely accounted by the 75,000 crore income transfer scheme, while funding for flagship farm schemes, except that on interest subsidy on crop loans, took a hit.

The PM-AASHA scheme, which promised farmers remunerative crop prices, was allocated 1,500 crore in 2019-20, a marginal increase of 100 crore from the previous year. While the budget for micro irrigation was reduced from 4,000 crore to 3,500 crore, the technology development scheme, Rashtriya Krishi Vikas Yojana, saw a marginal increase of 200 crore. Under the rural development ministry, allocation for the employment guarantee scheme fell from 61,084 crore in 2018-19 (revised estimate) to 60,000 crore next year, while that of the rural housing scheme fell from 19,900 crore in 2018-19 to 19,000 crore next year.