Why PM-Kisan could be a bankable project

The scheme has covered almost 60 per cent of small farmers who registered for it but the election model code of conduct delays an extended roll-out

In February this year, barely hours after Prime Minister Narendra Modi launched the headline-attracting Pradhan Mantri Kisan Samman Nidhi Yojana  (PM-KISAN) direct income support scheme , which promised to deposit Rs 6,000 a year into the bank account of small and marginal farmers, some cultivators in Maharashtra’s Nasik and Nanded districts faced a peculiar problem. 
 

Within hours of being credited, the first instalment of Rs 2,000 was debited from their accounts.Several of them subsequently complained to local agriculture officials who assured them that the reversal was a procedural hitch and the funds would be re-credited soon, which is what happened a few days later.

  

Rampal Tyagi, a 30-year-old sugarcane farmer in Nangal village in the Baghpat Lok Sabha constituency, said two people in his family registered for PM-KISAN but only one of them received the income support money. So although he appreciates the new scheme, he complains that strict inclusion norms and the plethora of paperwork have complicated the operation of the scheme. 

So far, data for the rollout of the first phase shows that nearly 60 per cent of the 47.6 million farmers who registered for the scheme have received the first instalment. Currently, data of over 19 million farmers is in the process of being corrected, having been found incomplete during the first round of scrutiny. For the 28.5 million registered farmers who have received their first instalments, the agriculture ministry plans to clear payments for the second instalment in the first week of April. 

“The start has been good so far, with many eligible farmers actually getting the first instalment in states where the governments have been proactive in sending farmer details to the Centre,” Shiraz Hussain, former agriculture secretary, told Business Standard. “However, there are bound to be inclusion errors in a scheme of such scale, but it hasn’t been assessed yet and will be known later,” he added. 

With the country officially in election mode, the ministry has sought Election Commission permission to add more names to the roster. Before the model code of conduct came into effect on March 10, around 40 per cent of the total eligible farmers were enrolled for the scheme. In 2019-20, this number is bound to go up. 

In the longer term, in fact, the success of the scheme may also expand demand. As Tyagi from Nangal village points out, Rs 2,000 is inadequate when a bag of DAP fertiliser costs Rs 1,400. 

“So far, people seem to be getting the money, but the real operational issues will be known later when it will come to light whether those who are eligible have been left out; also whether all eligible households have been included,” said Mahendra Dev, director of Indira Gandhi Institute of Development Research.

PM-KISAN follows a multi-stage verification process to ensure that data fed by states is accurate and the funds go to the right beneficiary. Once the states upload the list of beneficiaries under the scheme, the data is transferred on the Public Financial Management System (PFMS), which is then shared with the banks for verification. 

Once banks are satisfied with the beneficiary details, they instruct the line ministry to release the funds directly into the bank account of the beneficiaries. 

Officials said PM-KISAN more or less follows the same model that the government uses for its Direct Benefit Transfer programmes for different social sector schemes.

“Several times, the beneficiary  provided by the state is rejected by banks for being incorrect or inadequate, which is when we direct states to refurnish the data,” a senior official said.

By March 2019, according to official estimates, if all the registered beneficiary details — that is 47.6 million — are matched and uploaded, almost Rs 9,520 crore could be transferred into the bank account of farmers against the allocated Rs 20,000 crore for 2018-19 under the scheme.

This would also mean that government could end up saving almost Rs 11,000 crore from PM-KISAN in 2018-19, which could be carried over to 2019-20 (the Budget allocation for 2018-19 is Rs 20,000 crore). 

The amount for 2018-19 that goes unspent will go some way in helping the government meet the challenging fiscal deficit target, officials say. “Anything that helps the fiscal situation, we will take it,” said an official, admitting that the model code of conduct came as a “blessing in disguise”. 

Apart from the 47 million already registered before March 10, the Centre could have added 40 million more farmers and disbursed money to them had the model code of conduct not been in place.

(Arup Roychoudhury contributed to the story)