With farmers’ ire due to dwindling returns and falling prices threatening to hurt the ruling BJP in the crucial 2019 General Elections, the Centre decided on Friday to directly transfer an amount of Rs 6,000 a year to all eligible small and marginal farmers to meet their investment needs. The amount loosely translates into a support of Rs 500 per month.
According to some estimates, around 86 per cent of India’s farmers who are small and marginal, would directly benefit from the support.
According to Nabard's All India Financial Inclusion Survey (NAFIS) released in August 2018, in 2015-16 the average annual income of an agricultural household was Rs 1,07,172 compared to Rs 87,228 for families engaged only in non-agricultural activities. This will now go up by Rs 6,000 approximately.
The survey defined farm households as families having over Rs 5,000 as value of produce from agricultural operations in the year preceding the survey.
For all rural households, the average annual income stood at Rs 96,708. Forty eight per cent of rural families are agricultural households.
The Nabard survey covered 40,327 rural households.
Meanwhile, Finance Minister Piyush Goyal said that the income support will be provided in three equal instalments of Rs 2,000 each in a year. The support won’t cover tenant or landless farmers who, according to some estimates, number around Rs 140 million.
The programme will be called PM-KISAAN (Pradhan Mantri Kisan Samman Nidhi)
The income support would be provided to an estimated 1.2 million land-holding farmers in the country who own less than two hectares of land.
This measure, which has been discussed the past few months, more so after BJP lost power in the Hindi heartland states of Madhya Pradesh, Rajasthan and Chhattisgarh, will cost the exchequer around Rs 75,000 crore annually.
Of this, around Rs 20,000 crore will be the expenditure in 2018-19 financial year itself as the government plans to transfer two instalments of Rs 2,000 each by the end of March 2019, ahead of the general elections.
“Declining prices of agricultural commodities in the international market and fall in food inflation in India since 2017-18, relative to non-food sector, have reduced the returns from farming. Small and fragmented land holding on account of repeated divisions has also contributed in decline in the income of the farmer family. Hence, there is a need for providing structured income support to the poor land-holder farmer families in the country for procuring inputs such as seeds, fertilisers, equipment and labour, and to meet other needs. Such support will help them in avoiding indebtedness as well and falling into clutches of money lenders,” Goyal said while presenting the interim Budget of 2019-20.
Goyal also announced a host of measures for the allied sector that includes creating separate department of fisheries, which has been long pending and first proposed in the UPA-2 government.
That apart, he also announced restructuring of crop loans in the event of a natural calamity and the interest subvention is now proposed to extended to entire period of resettlement of loans.
The interest subvention has also been extended to farmers pursuing activities in animal husbandry who take loans through Kisan Credit Cards.