Among the announcements made in the Centre’s last budget before the general elections is the Pradhan Mantri Kisan Samman Nidhi, a scheme that will give farmers with landholdings below two hectares Rs 6,000 annually as income support.
Superficially, this resembles Telangana’s Rythu Bandhu scheme, an income support scheme launched in May 2018 that gives farmers Rs 4,000 per acre per season to help them pay for inputs such as seed, fertiliser and sowing. This amounts to Rs 8,000 per acre per year, Rs 2,000 more than the Centre’s scheme.
Unlike the Telangana scheme, the Centre’s scheme will not be on a per acre basis and will be limited to landholders with less than two hectares. Finance minister Piyush Goyal said that the income support will be transferred directly to farmers in three installments of Rs 2,000 each. The first installment will be paid to farmers on March 31, just before the general elections. Annually, the scheme will cost the Centre Rs 75,000 crore, he estimated.
Other states have launched similar schemes, notably Odisha, Karnataka and Jharkhand. These are yet to be implemented. Since the launch of Rythu Bandhu, economists and think tanks have been recommending that it be rolled out on a national level, as an alternative to fiscally unsustainable loan waivers.
Here is a short reading list to understand how thinking around the scheme has evolved:
- Until 2017, the Niti Ayog had pushed strongly for a market-linked price support scheme such as the disastrous Bhavantar Bhugtan Yojana of Madhya Pradesh, which promised farmers the difference between minimum support prices and market prices. This scheme ended up being exploited by traders to maximise their profit margins instead. Since then, economists have been pushing for a scheme modelled on Telangana’s Rythu Bandu scheme. A report by the Indian Council for Research on International Economic Relations talks about the relative merits of both schemes, concluding that a price support scheme is less likely to distort markets. Read it here.
- Former chief economic advisor Arvind Subramaniam has suggested that to make a direct income support scheme viable, it should replace other subsidies. He argues that this will have the benefits of reducing corruption in the implementation of other schemes, of decoupling farmer income from production and could possibly increase incomes. In Punjab, by eliminating subsidies for fertiliser and power, Subramanian envisions being able to transfer up to Rs 92,000 to cultivators or Rs 50,000 to agricultural labourers.
- But how has the Rythu Bandhu scheme worked on the ground? IndiaSpend reporter Bhanupriya Rao travelled to five districts with high farmer suicide rates to examine reasons for high levels of distress. The report shows how the Rythu Bandhu scheme, which excludes tenant farmers, has ended up bringing profits to absentee landlords instead. The support amount is also paltry against the losses tenant farmers stand to face, which can go up to Rs 50,000 per acre. In Telangana, farmers can expect to receive around Rs 10,000 to Rs 12,000 per acre as part of various state and central schemes, apart from the Rythu Bandhu input, according to the IndiaSpend report.
- Even Rs 8,000 per year is not enough to help farmers in Telangana truly offset their losses, a Newsminute report found. Farmers instead want higher subsidies on fertilisers, seeds and pesticides, as Rs 8,000 only gets used up “in household expenses”.
- As with other direct benefit transfer style schemes, land records digitisation is essential for a scheme linked to land ownership to work. Rediff points out that Telangana had a head start in digitisation and that it will be difficult to implement a similar one-size-fits-all scheme across the country. The report recommends that the rollout be limited to a few states at first.
- An analysis in Bloomberg Quint says that the Rythu Bandhu scheme does not do enough to address concerns of tenant farmers, nor does it fix larger structural problems in agriculture. In excluding tenant farmers, Telangana’s scheme leaves out a third of the state’s cultivators.
- Across India, it is not clear how many other such landless cultivators there are. One of the demands of the Kisan Mukti March to New Delhi last year was to grant all cultivators identity cards that would enable them to access institutional support for schemes that are now targeted only at landowners.