The farm income support scheme was launched after NDA’s other flagship schemes failed to tackle rural distress
The scheme promises to pay ₹6,000 every year to each of the 120 million farmer families in India
NEW DELHI: The Narendra Modi-led Bharatiya Janata Party (BJP) government at the centre announced a scheme for farmers in the interim budget presented on 1 February, with just a few months to go for the general elections and under immense pressure to assuage the anger of farmers. Then finance minister Piyush Goyal called it “historic" and said the income transfer scheme, Pradhan Mantri Kisan Samman Nidhi or PM-Kisan, will pave the way for farmers to live respectable lives.
The scheme, which comes against the backdrop of a prolonged period of agrarian distress marked by droughts and nosediving crop prices, promises to pay ₹6,000 every year to each of the 120 million farmer families in India who own less than five acres of land. The financial impact of the scheme will be ₹20,000 crore in 2018-19 (towards a single instalment of ₹2,000 per household and ₹75,000 crore in 2019-20 for quarterly transfers of ₹2,000 per family.
How significant is this supplementary income for an average farmer family? According to data from the All India Financial Inclusion Survey (NAFIS) released by apex rural bank Nabard in August last year, on an average, farm households earn about ₹8,931 per month. An income support of ₹500 implies their monthly incomes will rise by 5.6%. While the amount is not insignificant for extremely poor households who own very little land, farmer organizations have termed it a “joke".
It is a desperate attempt on the part of the government to buy the farmer’s vote by transferring ₹2,000 to their bank accounts ahead of the elections, said the All India Kisan Sangharsh Coordination Committee (AIKSCC), a coalition of more than 200 farmer organizations after the budget announcement. “It’s a joke to think that the meagre transfer will free farmers from the moneylender’s grip," said Kiran Vissa, an activist of Telangana-based Rythu Swaraj Vedika, which is part of AIKSCC.
Data from the NAFIS survey showed that average outstanding debt per indebted farm household was a staggering ₹1,04,602 in 2015-16, more than 17 times the income support provided by the central government.
Experts and economists have criticized the scheme for leaving out tenant farmers and agricultural labourers who are among the worst affected by rural distress. However, a major fault line also lies in the timing of PM-Kisan, a flagship scheme, the fifth on agriculture, launched by the Modi government on 24 February .
It began with the Soil Health Card Scheme launched in February 2015 to correct the imbalance in the use of fertilizers and reduce costs of cultivation, followed by the Prime Minister’s Crop Insurance Scheme (February 2016), the electronic National Agriculture Market or eNAM (April 2016), and PM-AASHA, a scheme to ensure support price-based procurement of pulses and oilseeds (September 2018). That yet another scheme had to be rolled out just before the elections is testimony to the relative ineffectiveness of existing schemes that attempted to fix the triad of issues affecting farmers—prices, markets and weather uncertainties.
The crop insurance scheme has witnessed a fall in enrolment because of poor quality claim settlements and eNAM failed to provide farmers better prices as it was unable to break the monopoly of trader cartels. Despite PM-AASHA being launched with much fanfare ahead of the kharif harvest season last year, wholesale food price inflation has remained in negative territory for six months now, suggesting a steady erosion in farm gate revenues.
Yet, the launch of PM-Kisan marks a significant departure in the farm policy space, contends Ajay Vir Jakhar, chairman of Bharat Krishak Samaj, a policy advocacy body. “The programme in its current form is a livelihood support and should not be confused with input or price support... but it marks the beginning of a momentous shift that may eventually see cash transfers replacing input subsidies or extension services provided by the government," he said.
The jury is still out on the implementation of the scheme, which could be jerky because of glitches in reconciling land records with identity proofs and bank accounts. However, there is fear that public investments in agriculture, say in irrigation or improving productivity by technology infusion, may see a rollback as direct income transfers gain currency.
So far, several states such as Telangana, Odisha, Jharkhand, West Bengal, and Andhra Pradesh have announced income transfer schemes for farmers, allocating resources far surpassing their own budget for agriculture. The approaching elections have increased the attractiveness of income support schemes, but how this will change the nature of state and federal expenditure on agricultural programmes will be clearer only in a few years time.