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    Government may sow big scheme to weed out farm distress

    Synopsis

    Govt is considering changes in the MSP and also a direct income transfer to make up for low income from farms.

    1Agencies
    Policymakers are more inclined toward a targeted scheme that can immediately provide some relief to farmers as this would also spur the investment cycle in the farm economy.
    With the general election a few months away, the central government has begun crunching the numbers in preparation for a comprehensive programme to help farmers tide over challenges posed by a dip in prices and dwindling incomes.

    The government is keen on a more substantive intervention than a loan waiver at the central level to alleviate agrarian distress besides stepping up investments in the sector, having concluded that writing off debt doesn’t help address underlying problems.

    It is considering further changes in the minimum support price (MSP) regime to make it more effective and also a direct income transfer to make up for low income from farms.

    “The second option (direct income transfer) entails large numbers,” said a government official, adding that it also needs to be seen how the benefits can be targeted to reach poor farmers who need the support.

    The Centre announced a tweaked MSP programme in September 2018 but a more liberal scheme under which a farmer can get the difference between prevailing market rates and the support price is also being looked at.

    Policymakers are more inclined toward a targeted scheme that can immediately provide some relief to farmers as this would also spur the investment cycle in the farm economy.
    2


    An income transfer scheme for poor farmers based on the Socio Economic and Caste Census (SECC) that has already mapped household deprivation may be the best answer, according to some in the government.

    It may also be politically more acceptable after the ruling Bharatiya Janata Party recently lost assembly elections in three north Indian states to Congress. That was followed by farm loan waivers announced by Congress-ruled and other states.

    FISCAL PRESSURE
    A central scheme focussing on income transfer may put pressure on the government’s finances, forcing it to change the fiscal glide path to meet funding requirements. The fiscal deficit is projected at 3.3% of GDP this year and the medium-term goal is to reach 3% by FY21. The Centre is now looking at all possible scenarios, including sharing costs of such a programme with the states.

    In a note last month, SBI Research had suggested payments of Rs 12,000 per family per year in two instalments for 216 million small and marginal farmers. The total outgo was seen at Rs 50,000 crore, almost equal to the amount the government spends on the rural employment guarantee scheme.

    STATE SCHEMES
    The income transfer scheme could be on the lines of Telangana’s Rythu Bandhu scheme, which offers ? 4,000 per acre to all land-owning farmers.

    Jharkhand and Odisha have followed in its footsteps even as debate rages on the best form of assistance to farmers. Odisha has launched the Kalia scheme that will provide ?10,000 to about 3 million small and marginal farmers for the rabi and kharif crops. Jharkhand has announced a ?5,000-per-acre payment to 2.3 m medium and marginal farmers from the next financial year.

    West Bengal has announced two new schemes for farmers and farm labourers in the state that entail a payment of ?5,000 per acre every year in two instalments besides ?2 lakh to the kin of farmers who die due to any reason, including suicide.

    PM Narendra Modi described the loan waivers by Congress state governments as “political stunts”, ANI reported on Tuesday. He said in an interview that most farmers don’t benefit from them as only a few take loans from banks and most borrow from money lenders.


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