The stimulus package recently announced by the government distinctly aims at increasing farmer income and alleviating suffering within the rural precincts. However, considering the acute agrarian hardship being presently experienced in the villages and the magnitude of distress due to a fall in farm prices, the expectations from the government have been much higher. The reverse flow of migration from the cities to the rural area is also adding to the strain in the rural economy, which needs addressing. It is in this context that comprehensive income support measures by way of direct cash infusion by the government should be urgently considered to provide quick relief to farmers and take agriculture to the centerstage of economic activity.
ICFA suggests six comprehensive steps which would help provide succor to farmers.
Firstly, an immediate measure would be to substantially raise the direct income support provided under PM-Kisan scheme from Rs 6,000 to Rs. 24,000 per farm family. This would serve to provide additional income in the hands of around nine crore farmer families registered under the scheme. This would entail an outgo of Rs. 2.2 lakh crore of which Rs. 75 lakh crore has already been allocated under the Union budget. This would mean an additional outgo of Rs. 1.5 lakh crore which is a small amount considering the additional demand it would create in the economy and help address farmer distress.
Going forward, the scheme could also be expanded to include tenant farmers, non-loanee farmers, women-headed farmer households and single-women farmers. Gram sabhas can play a pivotal role in verifying claimants who lack Aadhaar card. Second, a sum of Rs. 1000 should be deposited every three months in the bank accounts of the thirty-eight crore Jan Dhan account holders instead of putting Rs. 500 every three months in the bank accounts held by women. This would help to mitigate some of the suffering of the rural citizens.
Third, a sum of between Rs. 250/- to Rs. 500/- should be disbursed to farmers as bonus for every quintal of rabi crop purchased by the government. This would partly compensate the farmer for the disruption in wholesale markets and transportation hurdles which have ravaged the rural economy. It would also provide some relief especially as all other sources of income have dried up.
Fourth, while fixing minimum support price (MSP) for farm produce, the government should assure 50% profits based on ‘C2’ costs as was promised under the BJP manifesto in 2014. C2 cost is based on a comprehensive measure of cultivation costs that includes the imputed cost of capital and rent on the land. Presently, the government intends to use a narrower measure that is restricted to costs incurred by the farmer and the value of family labour (‘A2+FL’). Fifth, doubling the limit of Kisan Credit Card and making available money at a nominal interest rate of one per cent to card holders would be another significant step. At a time when the agriculture and MSME sector are floundering, the measure would take care of their loan this year not only from banks and lending institutions but also from the informal sector.
Finally, to provide livelihood opportunities to migrants, the government should increase its investment in building agri infrastructure by raising the allocation under both PM Rural Roads scheme and PM Rural Housing scheme from Rs 19,500 crore each to Rs 40,000 crore and employ agri-labour including migrants for infrastructure building. This would help address the problem of shortage of roads and housing in the rural area while at the same time helping in employment generation. Similarly, MNERGA should be modified and extended to cover farm-oriented activities. This would, apart from addressing the livelihood problem, also take care of the shortage of farm hands. These six measures would go a long way to help revive rural India and quicken the path of economic recovery.