The various options like Minimum Support Price for about 25 crops, Farm Loan Waiver schemes undertaken by various state governments have failed to alleviate the problem. The Direct Cash/Investment scheme has however fared better and is a prudent scheme.

 Farm Loan- waiver schemes are a band-aid solution as Agriculture in India has been facing many issues over a period of time. Many small farmers aren’t eligible for bank credit, making them borrow at exorbitant interest rates from private sources.

 However, Loan-Waivers is not a comprehensive solution because

• It entails a moral hazard even those who can afford to pay may not, in the expectation of a waiver.
• According to NABARD’s Financial Inclusion Survey (NAFIS), only about 30.3 % of Indian agri-households took loans from institutions.
• It enforces and strengthens uneconomical populism and abjures the government from its responsibilities.
• Further, studies have revealed that the small and marginal farmers constituting about 85% of all farmers are mostly not benefitting from waivers.
• A study by RythuSwarajyaVedika in June 2018 showed that 75% of farmer suicides in Telangana are by tenant farmers, who have no or least access to formal credit.

 Minimum Support Prices: Price volatility makes life difficult for farmers. MSPs ensure that farmers get a minimum price for their produce in adverse markets.

However, MSPs also have many cons

• Most of the small farmers have failed to get MSP as they don’t produce marketable surplus.
• As per NSSO 2012-13, less than 10 per cent of the country’s farmers sold their produce at MSPs — the percentage though is a little higher for sugarcane, wheat and rice farmers.
• MSP has failed to keep pace with the input costs (as per CACP Data).
• Only about 6% of the farmers were aware of MSP.
• High leakages and wastage in procurement have failed MSP.
• Large-scale corruption also left farmers high and dry.
• MSPs have lead to promotion of cultivation of water intensive crops like Paddy and Sugarcane.
• The criticism of Economists, MSPs leading to Inflation, market distortion and mono-crop culture is also a grave matter of concern.

Direct Cash/Intervention Scheme:  This involves the Direct Benefit Transfer (DBT) of the cash to the farmers.

• It can be enforced to include almost all the farmers who have access to formal banking channels (Jan-Dhan Accounts).
• Provides financial help at proper time/ season and would also spur the investment cycle in the farm economy.
• Helps large as well as small farmers and can even be capped to limit unwarrantedly huge transfers to rich farmers.
• The corruption issue can be eliminated as farmers directly get the cash in their accounts.

Case Study: The Telangana government’s income/investment support through the Rythu Bandhu Scheme (RBS). Telangana started RBS in May 2018, whereby it gave Rs 4,000 per acre to every farmer. This transfer is made twice a year, coinciding with the two cropping seasons. By directly giving cash, the government aims to support the input purchases of farmers. The scheme is said to have reached almost 93 per cent of landowners.

In terms of costs, estimates show that a national farm-loan waiver is likely to cost about Rs 4 to 5 trillion. An RBS-style income transfer is likely to cost about Rs 2 trillion.

• Odisha has launched the KALIA scheme that will provide Rs. 10,000 to about 3 million small and marginal farmers for the Rabi and kharif crops.
• Jharkhand has announced a Rs. 5,000-per-acre payment to 2.3 m medium and marginal farmers from the next financial year.
• West Bengal has announced two new schemes for farmers and farm labourers in the state that entail a payment of Rs.5,000 per acre every year in two instalments besides Rs.2 lakh to the kin of farmers who die due to any reason, including suicide.

Other reforms along with the direct intervention scheme include

• Breaking the stranglehold of the Agricultural Produce Marketing Committees (APMC).
• The Essential Commodities Act (ECA of 1955) requires reforms.
• The negotiable warehouse receipt (NWR) system has to be scaled up.
• Value-chains — based on the Amul model — are needed for most crops.
• Land laws need to be less restrictive.
• Contract farming should be promoted
• Agro-exports are in need of a conducive environment to grow.

Conclusion:

Through higher MSPs or through loan-waivers, one cannot reach more than 20 to 30 % of Indian farmers. This limited reach, therefore, cannot redress the widespread grievances of Indian farmers. An income transfer scheme for poor farmers based on the Socio Economic and Caste Census (SECC) that has already mapped household deprivation may be the best answer.