Context: Prime Minister has released the 15th instalment of the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme on 15th of November,2023.
PM KISAN SCHEME
- It is a centrally sponsored scheme under which an input support of 6,000/- per year in 3 equal instalments will be provided to all land holding farmer families.
- The fund will be directly transferred to the bank accounts of the beneficiaries.
- Exclusions: Farmer families who pay income tax, with government employees and professionals like doctors etc. are excluded.
Need for PM KISAN:
- Lack of access to Institutional credit: According to RBI’s financial inclusion report more than 60% of marginal farmer’s credit is from informal sources.
- More effective than debt waiver: Unlike debt waiver schemes, Input support schemes don’t hamper credit culture.
- Crop neutral: unlike MSP support, this is crop neutral
(MSP mechanism favoured cereal crops like Rice and Wheat over other crops)
- WTO subsidy limit: Income support schemes like PM KISAN do not come under Amber box of WTO subsidies and hence don’t cross the AoA (Agreement in Agriculture) limit.
- Better price realisation for the farmers: Farmers are still preferring to sell their produce to the trader or commission agent in the local mandi even after the advent of e-NAM. This is primarily due to the input credit support extended by the traders to the farmers. As a result, farmers often do not realise the prices.
However, the scheme has its own limitations
Issues with Agricultural input support scheme:
- Insufficient support: The financial support given under the scheme are often insufficient to meet the input costs of the farmers.
- Identification of beneficiaries is a challenge because of lack of proper digitalisation of land records.
- Tenants and Sharecroppers are not covered.
- Inefficient disbursement: Banks often adjust these deposits (the money deposited to the beneficiary by the govt under the scheme) against the past liabilities.
- Inefficient use of Inputs (fertilizers and water) increases the input costs and render input support scheme by the govt ineffective in helping the farmer reducing the input cost burden.
- Misuse of Input money: Often money credited as part of DBT is not used for the intended objective.
Ex: Using the money for Alcohol consumption
- Not a permanent solution: Input support through DBT is not going to address the fundamental issues that are responsible for farming crisis in India.
- Digitalisation of land records to identify beneficiaries properly and avoid exclusion errors.
- Implement Model Tenancy act: In India land tenancy is often informal. This makes it challenging for these input support schemes to identify and include tenants under the benefits. So, implementation of Model tenancy act (2021) will help in addressing this challenge.
- Provide input support in kind rather than cash.
- Input support should be supplemented by Improvement in Agricultural Infrastructure, undertaking marketing reforms and providing agricultural insurance to every farm.
- Improve input use efficiency through Micro irrigation technologies, Neem coating of Urea etc. to reduce input costs.