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Budget 2019: Farmer payout Rs 6,000 won’t cost much but won’t mean much either

Under the Pradhan Mantri — Kisan Samman Nidhi scheme, all farmers cultivating up to two hectares (5 acres) will get direct income support of Rs 6,000 annually, payable in three equal instalments of Rs 2,000 each.

Written by Harish Damodaran | New Delhi |
Updated: February 2, 2019 11:15:45 am
budget, budget 2019, budget 2019 highlights, budget 2019 india, Government’s much-awaited ‘farm package’ amounts to a Rs 2,000 payout to about 12 crore farmers. (File photo)

Work out the basic arithmetic of a farm’s expense — fertiliser, machinery, fuel, seeds — and an annual Rs 6000-payout, an average of Rs 16.40 a day, doesn’t add up to much.

In fact, a Rs 2,000 payout to about 12 crore farmers before the ensuing Lok Sabha polls — that’s what the government’s much-awaited “farm package”, unveiled in the Interim Budget for 2019-20 on Friday, would practically amount to.

Under the Pradhan Mantri — Kisan Samman Nidhi (PM-Kisan) scheme, all farmers cultivating up to two hectares (5 acres) will get direct income support of Rs 6,000 annually, payable in three equal instalments of Rs 2,000 each.

As per the 2015-16 Agricultural Census, out of the country’s total 14.57 crore operational holdings, there were 12.56 crore of less than two hectares size. The Interim Budget has provided Rs 75,000 crore for PM-Kisan in 2019-20, which can more or less finance the proposed Rs 6,000 payment for these farmers.

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But that payment can happen only after April, by which time the Election Commission’s Model Code of Conduct would already be operational.

However, the budget has also made of provision of Rs 20,000 crore towards the scheme for the current fiscal. This will allow payment of one installment of Rs 2,000 before March 31 for up to 10 crore farmers. By then, it is election time.

What can Rs 2,000 do?

* It can buy 7.5 bags of urea (@Rs 266.50/bag) or, alternatively, nearly 1.5 bags of di-ammonium phosphate (DAP; @Rs 1,450/bag) and over 2 bags of muriate of potash (MOP; @Rs 900/bag).

A wheat farmer typically uses three bags of urea, 1.5 bag of DAP and 0.5 bags of MOP per acre — a total of Rs 3324.50.

A sugarcane grower, likewise, applies 5 bags of urea, two bags of DAP and one bag of MOP per acre.

Also Read: Union Budget key points explained: Sops for farmers and middle class ahead of elections

Thus, with Rs 2,000, they won’t be able to even procure their fertiliser requirement for one acre.

* They can harvest just over one acre of wheat, given current rate of Rs 1,500 per acre charged by combine operators.

* And at around Rs 66/litre, they can purchase 30 litres of diesel, which will not even fill the fuel tank of a tractor whose capacity ranges from 35 litres to 60 litres.

* Rs 800 is the average cost of a packet of Bt cotton seeds. For one acre, a farmer needs 1.5 packets. Rs 2000 would barely cover two acres.

“Yeh toh oonth ke mooh mein jeera hai (this is like feeding a camel a few cumin seeds). What kind of package is this, which is adding insult to injury? It does not benefit even a one-acre farmer, leave alone somebody like me,” said Jitender Singh Hooda, who cultivates eight acres at Kheri Bairagi village of Shamli district in Uttar Pradesh.

PM-Kisan is a variant of the K. Chandrashekar Rao-led Telangana government’s Rythu Bandhu scheme, which, however, provides direct income support on a per-acre basis and extends it to all farmers, sans any ceiling on land ownership.

This support is to the tune of Rs 8,000 per acre, payable in two installments before the post-monsoon kharif and rabi winter crop seasons, respectively. A farmer with five-acre holding cultivating two crops would, thus, get Rs 40,000 under this scheme, more than the flat Rs 6,000 that he would be eligible for under PM-Kisan for a whole year.

“The Centre’s scheme is too little and too late. It is unlikely to yield the political dividend that Rythu Bandhu did,” noted Ashok Gulati, economist and former chairman of the Commission for Agricultural Costs and Prices.

The Telangana government made its first installment payout under Rythu Bandhu totalling around Rs 5,600 crore before the 2018 kharif season. The second installment of Rs 6,400 crore was paid for the 2018-19 rabi season just before the Assembly elections held on December 7.

The Election Commission permitted the payment to be made through direct benefit transfer and not issuing cheques in public functions, as was done for the kharif season.

The Biju Janata Dal government in Odisha, too, has come out with its own Kalia (Krushak Assistance for Livelihood and Income Augmentation) scheme, providing financial assistance of 25,000 for every farmer in the state owning up to 2 hectares and Rs 12,500 for all landless agricultural households. The Rs 10,000-crore scheme has already been kicked off for implementation from the current 2018-19 rabi season.

The saving grace, from a fiscal standpoint, is that PM-Kisan will not cost much.

Implementing it for a full financial year – which would entail an outgo of Rs 75,000 crore – is a call for the next government to take. By delaying the announcement of its “farm package” till the fag end of 2018-19, the Modi government has probably ended up not rocking the fiscal boat, even while trying to send out the right signal to farmers.

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