Is the Modi government moving towards direct cash transfers?



The moot point is that now is the time to seriously think about merging income support schemes like PM-KISAN at the Central and State level.

Prime Minister Narendra Modi announced that his government’s relief and recovery plan is Rs 20 lakh crore, or nearly 10% of India’s GDP. Most experts hailed this bold move. But when the finance minister unraveled the package, sector by sector, many wondered where the “new liquidity” lay. It didn’t take long to realize that the additional lean and revival of the system is only about 1% of GDP, not 10%. Much of the rest goes to increase cash flow, defer some loan repayments, etc., but not a lot of extra money.

The government has been stingy with cash payments, likely because government tax revenues are dwindling and it is reluctant to print more money for fear of being downgraded by rating agencies. Even the most affected migrant workers do not receive much cash assistance. Farmers, too, have suffered losses as a result of falling agricultural prices, especially for perishables. Onions and tomatoes, for example, sell for around Rs 6 / kg in the largest Indian mandis like Lasalgaon, Chittoor or Kolar. This is against their cost of around Rs 10 / kg. This has been the case with farmers who grow flowers, grapes and even milk in most places. The only thing the government did was to levy Rs 2,000 per farming family under the PM-KISAN program, which was initiated in all cases.

It is in this context that the government of Chhattisgarh deserves compliments for launching Rajiv Gandhi Kisan Nyay Yojna, an income transfer program of $ 10,000 / acre for rice farmers and Rs 13,000 / acre for producers. of sugar cane. Chief Minister Bhupesh Bhagel said it would also be granted to farmers of other crops and would in fact be extended to landless workers as well. We will have to wait and see how this plays out, but at first glance it will help put money directly into the hands of poor farmers and farm workers.

Bhupesh Bhagel is not the first head of state to move in this direction. In fact, during the 2018-19 Kharif season, Telangana CM K Chandrashekar Rao (KCR) was the first to implement an income transfer program of Rs 4,000 / acre, per season – this amount was increased to Rs 5,000 / acre, per season, from the 2019-20 kharif season. There is a live portal for the 2020 season that gives details about the program and its progress. During the 2018-19 rabi season, Odisha launched the KALIA (Krushak Assistance for Livelihood and Income Augmentation) program on a somewhat similar model, as did West Bengal with Krishak Bandhu in January 2019, and Jharkhand with Mukhya Mantri Krishi Aashirwad Yojana. All of these income support programs were launched just before the elections for obvious reasons, and they also prompted the Center to announce PM-Kisan support of Rs 6,000 per farming family.

This proliferation of income support policies is welcome. But, it is high time now to distill them with a view to drawing important lessons from them and, in light of this, to refine / merge these diagrams so that they perform their function in an efficient and inclusive manner without too much leakage. .

The first question is whether this income support is given to the owner-farmer or the sharecropper who actually plows the land. Ideally, it should go to the real tiller. But, the problem is that in large cases, there is no rental record. Government data shows only 10% rental in the country while several studies at the micro level indicate it could be between 25 and 30%. In fact, in many areas, like the Godavari belt, it could even exceed 50%. It doesn’t make much sense to put money in the accounts of absent owners. The best way would be to change lease laws and open up land lease markets, ensuring that the landowner has the full right to take back his land after the lease period expires. The current law, favoring “the land to the plowman”, is challenged against the owner. As a result, much of the rental in the country remains oral.

In the absence of this legal change in land lease laws, the only way forward is to fully inform the plowman that the landlord has obtained this income support and to appeal to the landowner to pass it on. this advantage over the plowman or adjusts it. in its land rental. The more information and persuasion through massive campaigns on the radio, in newspapers, etc., the better the chances that the profits will be passed on to the real ploughmen, or at least help the tenants to negotiate the terms of the lease.

The other problem is that of identifying landless workers working on farms. The majority of them are temporary and seasonal workers, which can open the door to significant leakage and corruption if their identification is left to the Patwaris or even the Panchayats. In the past, there has been talk of aligning MGNREGA with farms to contain the cost of farming, as well as to ensure that MGNREGA workers do useful and productive work. The MGNREGA legal framework allows this in the farms of SC / ST and marginal farmers.

The moot point is that now is the time to seriously think about merging income support schemes like PM-KISAN at the Central and State level, as well as MGNREGA on the one hand, and price subsidy schemes. such as food and fertilizer subsidies at the Center and electricity subsidy at the state level. Together these will amount to around Rs 5 lakh crore, an amount sufficient to start basic income coverage for poor households and then let the markets operate freely. With this holistic approach, they can cover landless workers, farmers and poor consumers, as all these categories overlap.

That there be a group of experts to take a close look at how each of these various programs works and create a comprehensive framework program to care for the poor and needy. Is the Modi government moving towards direct cash transfers?

Infosys Chair, Professor of Agriculture, ICRIER
Views are personal

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