You are here: Home » Interim Budget 2019 » News
Business Standard

Interim Budget 2019: Unconditional cash transfer to farmers better than UBI

The study said that there have been reports saying that government is planning to provide direct cash support to the farmers in lieu of various farm level subsidies/support

Interim Budget 2019  |  Universal Basic Income  |  Sbi

Press Trust of India  |  New Delhi 

Farmers, Farm sector

The government should opt for the unconditional cash transfer to farmers to alleviate agrarian distress rather than (UBI) scheme, the said in a report Tuesday.

At present, it may not be feasible to initiate Rythu Bandhu Scheme on national level as land data in several states, including Jharkhand, Bihar, Gujarat, and Tamil Nadu are yet to be digitised, the said in its 'Ecowrap' report.

"Hence, it is best to initiate unconditional cash transfer scheme as it will be more equitable (on a per farmer basis) with a meaningful impact and once the problems are ironed out in terms of proper tenancy laws, then make it conditional," it said.

The study said that there have been reports saying that government is planning to provide direct cash support to the farmers in lieu of various farm level subsidies/support.

"In Budget 2019-20, Government had estimated Agriculture subsidy (plus support) at Rs 98,100 crore (Crop Insurance: Rs 13,000 crore, Interest Subsidy: Rs 15,000 crore and Fertilizer Subsidy: Rs 70,100 crore)," the report said.

Such move comes on the back of suggestions in public domain by noted agri-economists as well as Niti Aayog that perhaps Rythu Bandhu Scheme that is fiscally prohibitive to launch on a pan India level should be netted against fertiliser subsidies, interest plus and insurance support, it said, adding that instead of this the farmers should be provided the benefit as direct cash in their account.


Interim Budget 2019

ALSO READ: Infra, real estate to get attention in the upcoming Budget: Epic Research"We however believe this argument has flaws, though a cash transfer scheme is always a better option than an (UBI) scheme. Many countries have found that UBI does not address the structural problems and is at best a solution in interregnum," the report noted.

Against this background, it estimated an approximate amount that farmers are getting presently and how much would they benefit on a net basis from such cash transfer scheme, if it was to be subsumed within cash transfer.

"Our calculation suggests that if a farmer is availing one or all the three modes of subsidy/supports from the Government, then he/she will receive minimum of Rs 5,335 to maximum Rs 10,162 per annum as cash support," it said.

Hence the government will need to provide cash support in the range of Rs 10,000-12,000 per annum to make it completely cash neutral and the annual cost of such a scheme is Rs 1.2 lakh crore per annum, the report noted.

Tenant farmers, who constitute a significant proportion of total farmers in India, will possibly be excluded under the proposed scheme, it noted.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, January 22 2019. 20:20 IST