The general budget of 2019 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.

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The significance of Pradhan Mantri Kisan Samman Nidhi (PM-KISAN):

• Pradhan Mantri Kisan Samman Nidhi will provide assured income to small and marginal farmers.
• The amount will be transferred directly into their account in 3 equal instalments.
• The complete expenditure of Rs 75000 crore for the scheme will borne by the Union Government in 2019-20.
• The revised Scheme is expected to cover around 2 crore more farmers, increasing the coverage of PM-KISAN to around 14.5 crore beneficiaries.
• With this decision, all land holding eligible farmer families (subject to the prevalent exclusion criteria) would avail of the benefits under this scheme.
• It would not only provide assured supplemental income to the most vulnerable farmer families, but would also meet their emergent needs especially before the harvest season.
• It would pave the way for the farmers to earn and live a respectable living.

Bottlenecks in the scheme:

• Landless labourers are not being covered 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).
• A targeted cash transfer scheme 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.
• Cash transfer scheme such as PM-KISAN 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 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.
• 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.
• According to National Bank for Agriculture and Rural Development’s (NABARD) 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.
• By taking away precious fiscal resources, it makes the farmer more vulnerable to both market as well as non-market induced risks.

Way forward:

• 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.
• The government must focus on three things: crop insurance, better irrigation and subsidised seed and fertilisers.

Conclusion:

It is in some of these contexts that strengthening an existing universal programme such as the MGNREGA would have been a prudent move instead of introducing a hasty targeted cash transfer programme. At a time of such acute distress, there is a need to the Central government to improve the existing universal infrastructure of the MGNREGA before plunging into a programme pretending to augment farmers’ income.