The Centre is considering increasing the income support to farmers under the PM-KISAN scheme by Rs 2,000-3,000 per farmer household from Rs 6,000 now, and stepping up procurement under the minimum support price (MSP) to ensure that rural income levels don’t fall in real terms.
The proposals in this regard are before the Prime Minister’s Office, senior officials told FE. On an annualised basis, the move could cost the exchequer Rs 20,000-30,000 crore. Though it is still not decided when the additional income support will be rolled out, it could be before ahead of the assembly elections in four States including Rajasthan and Madhya Pradesh and Chattisgarh.
Agriculture contributes to 40% of Madhya Pradesh’s Gross State Domestic Product while it is around 27% each in Rajasthan and Chattisgarh. These states with substantial agrarian populations will go to elections by November-December.
Income transfers to farmer households under the PM Kisan scheme started in February 2019, and these have given financial support to over 85 million families. A higher number of households benefitted from the scheme during the pandemic, but an exclusion criteria based on income profile and land holding has since reduced the number.
Of about 140 million farmer households in the country, roughly a third are tenants without land ownership, and these people are not covered under PM Kisan.
Given the government’s determination to keep the fiscal deficit within the budget target of 5.9% of the Gross Domestic Product (GDP), it may look at savings under heads such as centrally sponsored schemes (CSS) to fund any additional expenditure on PM-KISAN, one of the sources said.
Expenditure on CSS fell 9% on year to Rs 4.12 trillion in FY23 as states were not able to accelerate spending in many schemes, leading to saving of Rs 40,000 crore which was reallocated under various heads last year. Even the releases of Rs 4.12 trillion in FY23 could not be fully spent by states by March 31, leading to the floating of a chunk of funds. The Centre pushed them to spend those unspent spends before fresh funds in FY24 were released. So, there is an expectation that the Centre could save some funds under CSS from the budget outlay of Rs 4.76 trillion earmarked for FY24.
The government is also aiming to step up procurement under the Minimum Support Price (MSP) mechanism. Madhya Pradesh, Chhattisgarh and Rajasthan contribute significantly to MSP operations for wheat, rice, pulses and oilseeds.
Last month, Prime Minister Narendra Modi transferred the 14th instalments under the PM-KISAN scheme worth Rs 17,000 crore to 85 million farmers.
Since the launch of the direct cash transfer scheme in February 2019, more than Rs 2.59 trillion has been transferred to farmers’ bank accounts so far. Farmers are provided financial assistance of Rs. 6,000 annually through three four-monthly installments under the scheme.
Currently financial assistance under PM Kisan is provided to farmers with land holdings which are subject to certain exclusion criteria. It helps farmers to take care of expenses related to agriculture as well as other incidental expenses.
According to agriculture ministry officials, a database is being created for faster identification of beneficiaries under PM Kisan and other schemes.
The agriculture ministry said that the PM Kisan scheme has ‘spurred rural economic growth, eased credit constraints for farmers and boosted agricultural investments,’. It also said that the scheme also increased farmers’ risk-taking capacity, leading to more productive investments.
According to a study by International Food Policy Research Institute in Uttar Pradesh, PM-KISAN funds have acted as a catalyst in rural economic growth, aided in alleviating the credit constraints for farmers, and increased investments in agricultural inputs.
Source:financialexpress.com