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Insights into Editorial: PM-KISAN is not reaching all farmer households as intended

 

 

 

Introduction:

The Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) is the first universal basic income-type of scheme targeted towards landed farmers.

It was introduced in December 2018 to manage agricultural stress. Initially, the scheme was targeted at small and medium landed farmers, but with the declining growth in gross value added of the agricultural sector, it was extended to all farmers in May 2019.

The scheme was started with a view to augment the income of the farmers by providing income support to all landholding farmers’ families across the country, to enable them to take care of expenses related to agriculture and allied activities as well as domestic needs.

Under the Scheme an amount of Rs.6000/- per year is transferred in three 4-monthly instalments of Rs.2000/- directly into the bank accounts of the farmers, subject to certain exclusion criteria relating to higher income status.

The entire responsibility of identification of beneficiary’s rests with the State / UT Governments.

The Union budget had allocated Rs 75,000 crore to this scheme in 2020-21.

PM-KISAN during Lockdown period:

PM-KISAN is a useful vehicle to provide support to farmers during the lockdown and it was included in the Pradhan Mantri Garib Kalyan Package and on March 28 it was announced Rs 2,000 (out of Rs 6,000) would be front-loaded to 8.7 crore farmers.

The problems with identification of beneficiaries in the absence of proper land records are well-known.

Also, there’s no particular reason why landless labourers or the urban poor should be denied an income support scheme. The scheme is no long-term solution — all it does is make life a little less difficult for many.

Two aspects of this scheme present particular challenges:

First, PM-KISAN is not reaching all farmer households as intended. Most of the farmers in UP, Haryana and Rajasthan own land and should be receiving benefits.

But only 21 per cent of the cultivators interviewed reported receiving the benefit. The exclusion is greater in UP than in Haryana and Rajasthan.

Second, this scheme is not pro-poor since recipients of PM-KISAN seemed to be better off than the general rural population even before the lockdown.

Given this uncertainty over the reach of PM-KISAN and its targeting, the relevance of the scheme needs to be carefully evaluated during this period.

 PM-KISAN is not reaching all farmer households:

  1. In a survey, the proportion of households that had to borrow to meet their day-to-day consumption needs during the lockdown was relatively low for the farmers (34 per cent) compared to casual wage workers and business households.
  2. While 7 per cent of farm households suffered from occasional unavailability of food during the lockdown, this figure was much higher for casual workers (24 per cent) and business households (14 per cent).
  3. On the whole, when compared to non-recipients of PM-KISAN (including both farm and non-farm households), these households exhibited lower signs of economic distress.
  4. About 35 per cent of rural PM-KISAN recipients suffered income losses to a large extent in comparison to more than half of the non-recipients.
  5. A little more than a third of PM-KISAN recipients borrowed money during this period as against 48 per cent of non-recipients.
  6. However, these households were somewhat better off than the general rural population even before receiving PM-KISAN benefits.
  7. Thus, their relative immunity to the income shock may not be solely due to PM-KISAN.
  8. Due to the volatile market and price fluctuations in different regions, it is important to index the cash transfers to local inflation.
  9. Also, the failure of Direct Benefit Transfer in kerosene in Rajasthan is a case in point, where the cash transferred to families has been insufficient to purchase kerosene, as the market price increased substantially.
  10. The scheme does not provide a clear design of transfers and a framework for effective grievance redress.

Other Important Income Support Schemes for Farmers:

Rythu Bandhu scheme (Telangana)/Farmers’ Investment Support Scheme (FISS):

  1. It is a welfare program to support farmer’s investment for two crops a year.
  2. The government is providing 58.33 lakh farmers, Rs.4000 per acre per season to support the farm investment, twice a year, for rabi and kharif seasons.
  3. This was the first direct farmer investment support scheme in India, where the cash is paid directly.

 Krushak Assistance for Livelihood and Income Augmentation (KALIA): 

  1. State Government of Odisha aims to lend farmers with an all-inclusive and flexible support system, ensuring accelerated agricultural prosperity.
  2. It will cover 92% of the small and marginal farmers of the State. An amount of Rs.10,000 per family at the rate of Rs.5,000 for Kharif and Rabi shall be provided as financial assistance for taking up cultivation.
  3. The farmers will have complete independence to take up interventions as per their needs.
  4. This component is not linked to extent of land owned and will greatly benefit share croppers and actual cultivators most of whom own very small extent of land.

Conclusion:

The impact of a welfare measure such as PM-KISAN can only be realised through financial support that provides farmers with adequate purchasing power to meet their daily basic necessities.

Therefore, to be effective, any cash transfer scheme should first ensure that there is enough cash provided to help bring an affected community out of poverty.

A direct transfer scheme like PM-KISAN is a game-changer and can have significant effects if it is timely, not transaction cost heavy and is provided with complementary inputs such as extension services.