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The PM-Kisan as a tool to prop up sagging rural demand, recording of tenancy to help the real cultivators and streamlining of agricultural subsidies could be three important themes for Indian agriculture in 2020.
With the defeat in the Assembly elections in Madhya Pradesh, Rajasthan and Chhattisgarh in December 2018, the Government realised that to win rural votes in the General Elections in May 2019, it needed to do something big and urgently. It found ₹20,000 crore in 2018-19 (Revised Estimate) and PM Kisan was announced in the Interim Budget. An amount of ₹6,000 per annum was to be paid to all small and marginal farmers with retrospective effect from December 2018.
Direct income support to farmers has been under discussion for several years but it was always felt that the country cannot afford it and it can only come in lieu of other subsidies. After the elections, the Government allocated ₹75,000 crore in the 2019-20 and in a wrong decision, extended it to medium and big farmers also.
During December 2018-March 2019, 4.74 crore landholders received the money under PM-Kisan. However, the scheme slowed down a bit and from April to November 2019, with only ₹36,000 crore paid to farmers. In a slowing economy, faster pace of transferring money can help in increasing rural demand. An incidental benefit of PM-Kisan is correction of land records but precise data on progress made has not been made available.
So far, money under PM-Kisan has been given to all land holders and the Government has not differentiated between rain-fed farmers and irrigated farmers or crops procured and not procured. The government can begin with rain-fed areas as they are more deserving than big farmers in irrigated areas.
Subsidies to agriculture in 2013-14 amounted to ₹1.36 lakh crore (at 2011-12 prices). It is known that they are inefficiently utilised. Can the model of PM-Kisan be used to directly transfer existing subsidies on bank interest, electricity, irrigation and fertiliser, etc?
Since money under PM-Kisan has gone to land holders recorded in revenue records, the tenant farmers and actual tillers have been left high and dry. There is no data to show that landlords have shared their income from PM-Kisan or reduced their rentals for tenants.
DBT of subsidy
This is the crux of problem due to which there is no progress on direct benefit transfer (DBT) of urea subsidy (₹57,099 crore in 2019-20). It is feared that DBT of fertiliser subsidy will go to land holders and actual cultivators will find urea at market prices too expensive. This may adversely impact food production. So the correct identification of tenant farmers, who actually cultivate the land (but do not own it), is necessary before DBT of fertiliser can be undertaken.
The Centre has to play a leading role in resolving this long enigma of actual cultivators not getting benefit of agricultural subsidies.
In 2020, the Government would do well to focus on rural economy.
The author was a Union Agriculture Secretary. Now, he is Visiting Senior Fellow, ICRIER.
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