The discourse on Indian agriculture has been dominated by farm distress leading to politics of competitive support offers. Several schemes have been pitched, such as the Pradhan Mantri Kisan Samman Nidhi, the Nyuntam Aay Yojana (NYAY), the Rythu Bandhu scheme of Telangana or the Krushak Assistance for Livelihood and Income Augmentation (KALIA) of Odisha. The unifying principle of these schemes is income or livelihood support for the farmers or poor households.

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Cash transfer support schemes:

• Bhavantar Bhugtan Yojana in Madhya Pradesh was sought to provide relief to farmers by providing the differential between MSPs and market prices.
• The Rythu Bandhu scheme of the Telangana government provides ?4,000 per acre for every season to all the farmers of the state. Similar initiatives have also been framed in Jharkhand and Odisha.
• In December 2018, Odisha launched the Krushak Assistance for Livelihood and Income augmentation (KALIA).
• Unlike RBS, KALIA is more complicated in design and implementation. It commits to give Rs 5,000 per SMF, twice a year, that is Rs 10,000 a year. It has already made payments to 1.2 million SMFs in January 2019.
• Recently the 2019 budget announced a scheme, Pradhan Mantri Kisan Samman Nidhi, under which vulnerable landholding farmer families, having cultivable land up to 2 hectares, will be provided direct income support of ?6,000 a year.

Pros of support schemes:

• Past experiences:
  • Success of cash transfers for cooking gas, food and the rural jobs scheme also seem to have convinced the government on adopting the mechanism for agriculture.
• Poverty reduction:
  • Cash transfer programmes have become an important tool of social protection and poverty reduction
  • It has immediate impact on reducing hunger and rural poverty.
  • They can help households to overcome credit constraints and manage risk.
• Better use:
  • This can increase productive investment, increase access to markets and stimulate local economies.
  • Income support can be used to make a repayment or at least activate a bank account which can then receive a loan.
  • It can increase investment in agricultural inputs, including farm implements and livestock
• Rural development:
  • It can serve as an important complement to a broader rural development agenda, including a pro-poor growth strategy focusing on agriculture.

Negatives of support schemes:

• According to National Bank for Agriculture and Rural Development’s All India Rural Financial Inclusion Survey (Nafis) small and marginal farmers earned Rs 79,802-1,19,878 in 2015-16.
• This means that the Rs 6,000 annual direct income transfer under PM-KISAN would be only about 5-8% of their existing income levels.
• This may not be much, particularly when compared with other direct income transfer (DIT) schemes rolled out in Telangana and Odisha.
• A Direct income transfer to landless labourers covered under KALIA’s livelihood component is missing under PM-KISAN.
• Cash transfers are not greatly superior in terms of leakages compared to other schemes of in-kind transfer such as the public distribution system (PDS). Uncertainties in receiving uniform and periodic cash payment would reduce the validity of the scheme as income. Targeting errors are also likely.
• The real issue with the approach of a targeted cash transfer scheme is that it envisions the role of the state to only providing cash income to the poor. This kind of approach seeks to absolve the state of its responsibility in providing basic services such as health, education, nutrition and livelihood.
• Does not eradicate poverty:
  • It may address certain aspects of inequality by ensuring a basic income, they will not eradicate poverty. Poverty is measured as deficits in income or consumption, but the underlying causes of these shortages are linked to human capabilities and access to resources.
• Cash transfer scheme such as PMKSN cannot be substituted for subsidies and other institutional support systems such as the National Food Security Act-powered public distribution system. In fact, such cash transfer schemes could be counterproductive and may lead to more distress.
• Cash transfers do not solve the following problems which are the reasons for the current agrarian crisis
  • The Agrarian crisis is not just of low incomes in agriculture. The genesis of the current crisis lies in the faulty and ad hoc export-import policy, lack of infrastructure and cartelisation and collusion in agricultural markets, which have prevented farmers from realizing the market prices for agricultural produce.
  • Cash transfers do nothing to resolve any of these, nor are they any guarantee of protection against unforeseen events, whether natural or policy induced.
  • Cash transfer is neither a substitute for the structural reforms needed in agriculture, nor does it adequately compensate the farmer for the risks and uncertainty of crop cultivation.
• Regressive:
  • Except for the KALIA scheme, which offers some relief to the sharecroppers and landless labourers most other schemes are regressive with amount of transfer proportional to the land owned.
• Identifying beneficiaries is tough:
  • In sugarcane and cotton, much of the ground-level work is organised and in the hands of cooperatives, where the person who has the operational holding of land is well identified. But in crops where the ownership holding is different from the operational holding, it might be
• In the absence of proper tenancy records, it will also benefit the absentee landlords.
• It is no substitute for the lack of investment in agriculture, which has declined at 2.3% per annum in real terms
• By taking away precious fiscal resources, it makes the farmer more vulnerable to both market as well as non-market induced risks.
• Fiscal constraints to states:
  • The income transfer scheme will further erode the fiscal capacity of states.

Way forward:

• Policy focus should be rather on investment — in efficient water management and irrigation, plant breeding and genetics, crop husbandry, market linkages and in breaking the middleman’s hold over the farm-to-consumer value chain, replacing it with farmer-led enterprises, whether cooperatives or producer companies, that allow farmers to capture a share of the value added to their produce along its journey to the factory or home.
• For a long-term solution, the government should first implement existing schemes, like it should give assured procurement and marketing of all commodities having MSP.
• The Swaminathan Committee in 2004 had recommended farmers be allowed to fix the price for their produce on their own (cost of production plus 50% as profit), keeping local factors in mind.
• Greater focus is required on enhancing farmer loan repayment capacity via smooth supply and value chains, and better price realisations.