india

Updated: Feb 28, 2019 07:32 IST

The combined benefits from the Narendra Modi government’s PM-KISAN scheme and similar cash-transfer programmes in five states will see the average monthly incomes of nearly four million small and marginal farmers go up between 5.6% and 14.9%, HT’s calculations show.

Five states — Telangana, Jharkhand, West Bengal, Andhra Pradesh and Odisha — have announced or are already implementing state-level income support schemes involving direct cash transfers to farmers. On February 24, the Centre rolled out the first tranche under the PM-KISAN scheme, which offers an annual cash transfer of ₹6,000 to small and marginal farmers in three instalments .

The Telangana government was the first one to roll out a cash transfer scheme for landed farmers. The state’s Rythu Bandhu scheme, launched in May 2018, offers farmers ₹8,000 per year for every acre of land owned.

Alongside the ₹6,000 of cash assistance under PM-KISAN, an illustrative example shows a farmer with one acre of land in the state stands to gain Rs 14,000 a year. Larger farmers in Telangana stand to gain even more because the cash transfer is on a per acre basis.

The average monthly farm household income in India is Rs 8,931 a month, according to data from the National Bank for Agriculture and Rural Development’s All India Financial Inclusion Survey released in August 2018.

The total benefits of both the federal and state cash-transfer scheme for a small and marginal farmer owning up to 2 hectares (or 5 acres) in Telangana stand at Rs 46,000 a year. This translates to a 42% increase in their monthly income (from the average monthly income of Rs 8,931).

In states without state-level cash transfers, benefits under PM-KISAN alone, which promises ₹6,000 a year, would raise monthly incomes by 5.6% (assuming a monthly sum of Rs 500.)

The Odisha government’s Krushak Assistance for Livelihood and Income Augmentation (KALIA) Scheme offers a lump sum of ₹10,000 a year for 1.4 million small farmers and Rs 12,500 for landless and tenant farmers. Together, with the central scheme, small farmers in Odisha would get Rs 16,000 a year, or Rs 1,333 a month. This represents a 14% rise in monthly incomes of small farmers in the state (over an earlier average monthly income of Rs 8,931.)

“Some part of this income will obviously be consumed and some of it will be invested (in farms). Rural consumption going up will give a boost to the economy,” said agricultural economist K Mani.

Andhra Pradesh has decided to merge the Centre’s PM-KISAN with its own cash-transfer scheme, Annadatha Sukhibhava.

Annadatha Sukhibhava is being billed as an investment-support scheme and offers direct cash transfer of Rs 10,000 to nearly 6.5 million farmers, including small farmers. The modalities of the scheme are such that the state government will add a ‘top-up’ amount of Rs 4,000 to the Centre’s Rs 6,000 a year under PM-Kisan.

The Jharkhand government is implementing its own cash-transfer scheme of Rs 5,000 per acre. Assuming small farmers own 5 acres, this means each small farmer will get Rs 25,000 in addition to Rs 6,000 under PM-KISAN. West Bengal has announced an annual cash transfer of Rs 5,000 per farm household, which takes up the total to Rs 11,000.

In many of the states, the total expenses incurred for cash transfer far exceed the states’ total budgetary support for agriculture.

On February 21, Odisha initiated the process of transfer of Rs 5,000 as the first instalment to 1.4 million small farmers. Remittances through direct benefit transfers under the first tranche amount to Rs 700 crore. When all targeted farmers are covered, the total expense is estimated to be nearly Rs 10,500 crore, well above the total public investments in the state’s agriculture sector..

Increasing allocation of resources into debt waivers or cash transfers will likely impact the capacity of states to make capital investments in agriculture, which is necessary for growth in the sector according to Sunil Kumar Sinha, principal economist at India Ratings and Research .