Citizenship Controversy has ensured that Economic Distress stayed from the Headlines

Category : Business

Amidst the gloom caused by the enactment of the Citizenship (Amendment) Act, the launch of the third installment of PM Kisan to six crore farmers has meant some fantastic news, at least to the rural sector. The CAA-National Register of Citizens protests has dominated discussions for the previous month. With the quarterly GDP growing at less than 5%, employment opportunities for rural workers in non-agriculture sectors are falling. The citizenship controversy has ensured that economic distress stayed from the headlines. PM Kisan strategy, or the Pradhan Mantri Kisan Samman Nidhi, was announced by the finance minister on February 1, 2019, before the Lok Sabha elections.

It was back-dated from December 1 2018 and a provision of Rs 20,000 crore was made to permit the government to disburse the first installment to small and marginal farmers by March 2019. States’ revenue department had to deliver Rs 2,000 as a first installment. Even though the government machinery was to become extremely busy in the conduct of elections, 4.74 crore landholders were enrolled within these eight weeks up to March 2019. Uttar Pradesh alone registered 1.53 crore of them. By November 30, 2019, 3.85 crores (out of these 4.74 crore beneficiaries) had received three installments of Rs 2,000 each. After the general elections, in a somewhat surprising move, the scheme was extended to all farmers, regardless of the size of the landholding.

Any anticipation of targeting the more deserving one of the land-owners was belied. At the four-month period from April to July 2019, another 3.08 crore landholders had been registered. Out of these, 2.47 crore had obtained two installments from November 30, 2019. After July, the plot appears to have slowed down and from August to November 2019, just 1.19 new land-holders were enrolled and out of the, just 73.66 lakh received the first installment in this period. Thus, 9.01 crore landholders had been registered under PM Kisan up to November 30, 2019, while the amount of operational holdings is about 14.5 crore. In actuality, landholders according to land records number could be higher.

Why only six crore beneficiaries received the third installment of 2019-20 on January 2, 20, it is not clear. India’s Farmers Will Continue to Face Price Crash Nightmares Until Export Markets Are Created PM Kisan is bringing money directly to the bank account of land-holders, thus providing some purchasing power to them in a slowing market. In a poor state like UP, it is the average income for a farmer of 1 month. The pattern of utilization of the money isn’t known if the money received is being used for agriculture and it is unclear.


Also, tenant farmers are not benefiting from the scheme, even though they’re the ones that are really engaged in farming while the landholders, especially the large ones holding over four hectares of land, use agricultural labor and marginal farmers for agricultural operations. Whatever the case, PM Kisan has shown that it is possible to provide income support to property holders without any intermediary’s involvement. Up to now, both the Union and the state governments have shied away from using PM Kisan (or direct benefit transfer) by differentiating between different classes of farmers. So, farmers in irrigated areas, developing crops like paddy, wheat, and sugarcane, for which the farmers do get a reasonable price, are treated at par with farmers in rain-fed locations, that are forced to grow crops that require much less water.

In the last three years, the procurement of pulses at the minimum support price has, no doubt, benefited rain-fed farmers but the farmers growing millets, oilseeds, cotton, etc. do not normally get the remunerative prices in the kind of MSP, though the situation changes from year to year. Since the water table in rain-fed areas is extremely low, farmers in these areas don’t use tubewells and thus do not receive an electricity subsidy. So that they get less fertilizer subsidy they also use less fertilizer.

Similarly, it provides a chance to decrease the area under sugarcane in Maharashtra. While there’s a political consensus that it is not sustainable to continue growing paddy and sugarcane in water-stressed areas, there is no agreement on the best way to compensate those farmers who agree to diversify from these water-guzzling crops. Immediate income support in the form of PM Kisan provides a viable and quick approach to attain such farmers. It has been argued that farmers should get inputs at market prices and subsidies should be paid to them directly. China is currently replacing the support price mechanism for cotton and soybean with immediate compensatory payments based partially on the area sown. India has not even considered a pilot. Siraj Hussian is currently a Visiting Senior Fellow at ICRIER and is a former Union Agriculture Secretary.

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