A farm relief or booster package for the farmers was expected in the Interim Budget 2019, given the focus of the Government on addressing the agrarian crisis. Living up to these expectations and walking a tightrope between financial prudence and populism, the Government announced an income support scheme for poor farmers. A gigantic outlay of ₹75,000 crore for FY 2019 and ₹20,000 crore for FY 2018 (starting December 2018) was announced under Kisan Samman Nidhi scheme, which will be funded entirely by the Central Government. Under this scheme, farmers holding less than 2 ha of land will receive ₹6,000 annually, in 3 instalments. This amount will be credited directly to farmers’ account.

What does it mean for the small farmer?

More than 72% of India’s farmers fall into the category of small and marginal farmers; the figure is expected to increase to 90%. Average annual income of small and marginal farmer ranges between ₹35,000-₹40,000, and the average land holding is around 1.23 ha. This is a very vulnerable section of the society which is hugely impacted by various factors — natural calamities can cause a loss of ~12% to 15%, lack of marketing facilities reduces income by ~15% to 20% and glut in the market can wipe out entire profit.

For an average marginal farmer, an additional income of ₹6,000 per annum could mean savings of around 15% to 20%. The farmer can use this additional income for productive purposes, like purchasing insurance, better quality of inputs, children’s education, repaying existing loans, storage of produce until market prices are favourable etc. This, in conjunction with subsidies provided by various other schemes of the State could have a multiplier effect on its economic benefits.

This scheme is also a step in the right direction to empower the small and marginal farmers financially, to address issues right from want of quality inputs, labour, dependence on monsoon to lack of marketing infrastructure and affordable finance. Centre seems to have drawn a leaf out of policies by State governments of Kerala, Telangana and Orissa who already have in place such income support schemes. It is an intermediate but systematic solution for addressing part of the financial distress of farmers. This system is not only inclusive but also easy to distribute and isn’t prone to leakages, provided there is due diligence in updating land records. While the successful implementation of this scheme remains to be seen, it is indeed a welcome move and a much- needed respite for the farming community.

Another important announcement for this sector is application of interest subvention of 2% for the entire duration of crop loan, even after loan rescheduling. An additional subvention of 3% will be given for timely repayment of loans, thereby encouraging financial discipline. The Government has continued to focus on the allied sectors - dairy, animal husbandry and fisheries. As fisheries has a sizeable contribution to agricultural GDP, a separate department is proposed for fisheries.

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