Interim Budget 2019-20 – A farmer’s perspective

Author: Pramod Kumar

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Recently, on first of Feb., the Interim Budget was presented in the parliament by the acting finance minister Piyush Goyal. Just before three months ahead of general election 2019, the present government has tried to influence the voters belonging to all sections of society, as always being done by the previous governments in the election year.

In the eyes of the farmers and people involved in allied activities like animal husbandry & fisheries etc. this interim budget contains some relief and big announcements. One such big announcement is PM-KISAN (Prime Minister KIsan SAmman Nidhi) scheme which aims to provide direct income support at the rate of ₹ 6000 per annum to all small and marginal farmers having cultivable land up to 2 hectares.

According to a survey done by NABARD in 2017, only 13% agricultural households is having more than 2 hectares of land, so a total of 87% farmers (about 12 crores, according to Agriculture Census Report 2015-16) would be covered by this scheme.

Fig. 1 – Distribution of Agricultural Households by size-class of land possessed(in %)                             Source – Indian Rural Financial Inclusion Survey 16-17 – NABARD

From the same survey report quoted above, we see the average monthly income of agricultural households in rural and semi-urban areas is ₹ 8931 per month out of which 35%(₹ 3140) is from cultivation(refer table 1). So, this direct support income is almost an income of 2 months that comes from the cultivation of land for farmers coming from rural and semi-urban areas of India.

If we go deeper into the minute details of the report, it can be seen that around 6% of agricultural households having cultivable land <0.01 Ha will get almost the income of 11 months (566*11 = ₹ 6226) from PM-KISAN scheme that they usually get from cultivation, around 31% having land 0.01-0.4 Ha would get income of 4 months (1488*4 = ₹ 5952) and so on. (refer table 2)

So, it can be said that this direct annual income can be a huge support for the low earning farmers in case of any natural calamities that results in total destruction of crops or otherwise.

Table 1 –   Average Monthly Household Income by Source of Income (In Rupees)
            Source – Indian Rural Financial Inclusion Survey 16-17 – NABARD

Table 2 – Avg. Monthly Income of Agricultural Household from Diff. Sources by Size of Land Possessed
 Source – Indian Rural Financial Inclusion Survey 16-17 – NABARD

But again if we look over the data of Indebtedness of no. of agricultural households which stands for 52.5% (refer table 3) and the average outstanding amount of debt per household being more than one lakh, this annual support income of merely ₹ 6000 is just like some drops in the ocean. Due to the huge amount of recurring cycle of indebtedness, despite the fact that government introduced Kisan Credit Card(KCC) and giving a loan to farmers at a lower interest rate, a large no. of farmers in our country commit suicide every year. Farm loan waivers which have been a strategy of many governments in the past are not actually serving the purpose although it can be an instant relief for farmers but not a long term solution.

Although this government have made genuine efforts in the past to remove the hardships of farmers by providing them soil health cards, quality seeds, and neem coated urea to remove shortage of fertilizers still it is the need of the hour to do some structural reforms like improving the quality of soil by promoting organic farming, running campaign to aware farmers about natural fertilizers, establishing cost-effective irrigation mechanisms etc. that can, in turn, increase their income and can help a little towards getting them rid of the recurring cycle of indebtedness.

Table 3 – Incidence of Indebtedness & avg. outstanding debt per indebted HH (in ₹)
             Source – Indian Rural Financial Inclusion Survey 16-17 – NABARD

Now coming to the animal husbandry and fisheries sector, Govt. have increased the allocation for Rashtriya Gokul Mission , launched in December 2014 with the aim of development and conservation of indigenous bovine breeds, to ₹ 750 crore in the current year and announced setting up of Rashtriya Kamdhenu Aayog to upscale sustainable genetic up-gradation of cow resources and to enhance production and productivity of cows.

Both the Gokul Mission & Kamdhenu Aayog can be seen as a structural reform that the government intends to do to increase the productivity in these sectors. But in an answer given in the Rajya Sabha on 4th of Jan. 2019 by MoS Shrimati Krishna Raj, total project cost approved under the Gokul Mission since its inception is ₹ 187609.74 crores out of which only ₹ 79263.22 crores has been utilized, which is merely 42% of the total approved. So, merely announcing big schemes but not being able to implement on ground level is a matter of concern.

Govt. also announced 2% interest subvention to the farmers involved in animal husbandry and fisheries, who avail loan through Kisan Credit Card and also 3% additional interest subvention in case of timely repayment, which seems to be good step but still in a “New India” and in the “digital age economy” a large no. of agricultural households, around 28%, (refer table 4) take loans from non institutional sources like moneylenders, landlords, relatives etc. where they can’t get the benefit of interest subvention. So, the people standing at last in the line of financial inclusion should be taken care of else the poor will become poorer and rich will become richer.

Table 4 –  Avg. Loan Taken in 2015-16 by borrowing Households by Type of Source (In )
            Source – Indian Rural Financial Inclusion Survey 16-17 – NABARD

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