The Centre is weighing a host of options to provide income support (cash transfers) to farmers and other low-income population with an underlying notion that the huge financial resources for the venture will be shared between it and the state governments. The fiscal burden will shift to the next fiscal year, giving room for the Centre to simultaneously rework some subsidies being given to farmers such as that on fertilisers and crop loans.
According to official sources privy to the discussions, cash transfer of Rs 4,000/acre in a year by the Centre for land-owning farmers appears to be the proposal that has gained the most traction.
Although whether this is to be open-ended to include all farmers or restricted to small & marginal and medium farmers, is still to be decided. The states are expected to make a matching contribution to make the combined cash transfers to be substantial.
The scheme is modelled on the Telangana’s Rythu Bandhu scheme (under which landowning farmers get Rs 8,000/acre/year), which has recently been emulated by Odisha and Jharkhand. The annual cost of such a move for the Centre is seen at a whopping Rs 1.3 lakh crore or thereabouts if no exclusion criterion is employed and all farmers are beneficiaries (given the country’s net sown area of 34.58 crore acres). The cost could be some Rs 58,000 crore if the succour is restricted to ‘small and marginal’ farmers (with holdings up to 2 hectare) who cultivate on 45 per cent of the country’s net sown area and if the ‘medium’ farmers (holdings between 2-10 hectares) are also included, then the cost could be roughly double that amount. Large farmers (those with land holdings above 10 hectares) account for just 10 per cent of the total sown area in the country. “The planned scheme is much more broad-based and rational than loan waivers as most farmers don’t take loans from the banking system,” one of the sources said. —FE