CONTEXT

That direct cash transfers (DCT) are the best way to support farmers — as opposed to subsidised supply of fertiliser and electricity or physical purchase of produce at above-market prices — is a well-established fact. The launch of the Pradhan Mantri Kisan Samman Nidhi (PM-Kisan) by Prime Minister, therefore, welcome, except that it is too little too late.

PM-Kisan Yojna

• The scheme provides a flat Rs 6,000 per year to all small and marginal farmers owning up to 5 acres of land — an estimated 12 crore — payable in three instalments.

• There is no crop with a basic cultivation cost below Rs 10,000 per acre today.

Drawbacks Of scheme

• An instalment of Rs 2,000 under PM-Kisan would enable a farmer to barely buy Bt cotton seeds for two acres, meet his fertiliser requirement of wheat for two-thirds of an acre or harvest cane from one-sixth of an acre.

• So, even if the money is transferred directly into the farmer’s Aadhaar-seeded bank sans any leakage, its utility from a purely agricultural standpoint is quite limited.

•  Such a narrow time window and then blaming them — especially those ruled by the Opposition — for not showing interest in the scheme smacks of political opportunism.

• Telangana and Odisha have come out with DCT schemes that, even if primarily politically-inspired, are more meaningful and effectively designed.

• The Centre alone has, for 2019-20, budgeted a mammoth Rs 2,77,206 crore towards food, fertiliser and crop loan subsidies. This is over and above the Rs 75,000 crore provision towards PM-Kisan.

Better Usage of Funds

• Abolishing the subsidy on fertiliser and farm credit — both of which have no real economic rationale — and limiting that on food to maintaining a minimum buffer stock to enable market intervention if necessary, it would be possible to create a Central DCT fund.

• The money from this can be used not only for resource-poor landowning farmersbut even share-croppers, landless agricultural labourers and other vulnerable households in both rural and urban areas.

• And with Aadhaar-seeded bank accounts and digitisation of land records, it can be well-targeted too.