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 Narendra Modi on Sunday is, therefore, welcome, except that it is too little too late. 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.
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.
Equally questionable is the timing. If the objective was to help farmers with even one instalment, howsoever little, why announce the scheme so late — in the Interim Budget on February 1 — and set a deadline of February 20 for submission of applications? Giving state governments 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.
On the other side, Telangana and Odisha have come out with DCT schemes that, even if primarily politically-inspired, are more meaningful and effectively designed. If farmers, especially those with small marginal holdings, are provided DCT covering even up to a fifth of their total input costs, it is a cost worth bearing. And it can be borne jointly by the Centre and the states.
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. By 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 farmers, but even share-croppers, landless agricultural labourers and other vulnerable households in both rural and urban areas. Such support is welcome, especially because it is not market-distorting. And with Aadhaar-seeded bank accounts and digitisation of land records, it can be well-targeted too.