Comprehensive support: PM-KISAN should include fertiliser subsidy

PM-Kisan's extension offers an opportunity to widen support to tenant farmers and use its DBT infrastructure to make fertiliser subsidies more targeted, transparent and efficient

The Union Cabinet’s recent decision to extend the Pradhan Mantri Kisan Samman Nidhi (PM-Kisan) scheme for five years from 2026-27 to 2030-31 can be considered an expected extension of a programme designed to provide annual income support to farmers. Under the scheme, farmers are paid ₹6,000 a year in three instalments. Using Aadhaar authentication and digital verification, the scheme has benefited 95 million farmers and has been upheld as an exemplar of financial inclusion and transparency and efficiency of the direct benefit transfer (DBT) mode of subsidy delivery. The smooth transfer of funds directly to farmers’ bank accounts — over ₹4.47 trillion in 23 instalments — certainly underlines the upside of the DBT method, which the government is deploying in other areas such as government scholarships and so on. The extension of PM-Kisan, however, raises questions about its efficacy, coverage and delivery of other agri-subsidies. 

Given the power of farm lobbies and the permanence of subsidies once they are introduced, the government could leverage the opportunity to usefully reorient the scheme. The financial outlay for the scheme for the five-year period has been approved at ₹3.15 trillion, which roughly translates into an annual outlay of about ₹64,000 crore. This suggests that the benefit per farmer remains unchanged at ₹6,000 since the scheme was introduced. Since agri-input prices have risen significantly after 2019, the effectiveness of an income-support scheme that is not indexed to inflation remains an open question. The space to increase this support is limited, however, given the overall fiscal constraints. But since small and marginal farmers, who comprise the bulk of India’s rural households, have been key beneficiaries, the scheme warrants an extension within the agri-universe. 

Currently, the PM-Kisan subsidy is paid only to land-owning farmers, not tenants. The scheme requires farmers to have landholdings in their name with states verifying local land-revenue records against the applicant’s name. The subsidy is paid irrespective of land-holding size. However, India also has a large number of landless and tenant farm households, which are acutely vulnerable to rising input prices, drought or floods, with limited access to markets compounding the perennial uncertainty of tenancy rights. Given the unique susceptibility of these farmers, an extension of PM-Kisan to this category would offer a deeper fulfilment of the government’s stated objective of protecting farmers’ livelihoods. The complication, of course, is the overlap between owners and farmers, a contingency that could be sorted through state verification. 

The link between landholding records and PM-Kisan delivery also offers an opportunity to streamline the burgeoning fertiliser subsidy. Since the scheme has proven its ability to meet the requirements of the JAM (Jan Dhan-Aadhaar-Mobile) trinity, it should be possible to calculate farmers’ requirement of fertiliser based on landholding size, and pay subsidies accordingly. Doing so would not only offer a more transparent system to the current regime of pricing subvention and routing the subsidy through fertiliser producers, it would also prevent the kind of leakages, especially of urea, the most used and subsidised fertiliser, that cause heavy subsidy losses. The PM-Kisan paradigm could well address a recurring expenditure that weighs heavily on the government’s fiscal management.