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Central spending on farm sector shows little growth without PM-KISAN

The sector seems to have played a decisive role in several seats in both the states
A cursory glance at the 2020-21 Union Budget numbers shows that spending on agriculture and allied activities has risen by a healthy over 91 per cent between 2018-19 actuals and the revised estimate of 2019-20 (the current financial year).

This sharp increase comes in a year when the government faces one of the steepest declines in gross revenue collections.

However, a deeper dive into the numbers reveals that if the money spent on PM-KISAN disbursals is weaned out, total Central spending for agriculture and allied activities in 2019-20 as per the revised Budget estimates has risen by a mere 5.61 per cent.

Clearly, a bulk of the farm ministry's spending is now being accounted for by PM-KISAN, the direct benefit transfer (DBT) model of boosting incomes without the interference of intermediaries.

And if feelers from the government are any indication, going forward, PM-KISAN will gradually become the marquee scheme for the agriculture sector, akin to what MGNREGA was for UPA-1 and 2.

Perhaps that explains why, despite reports of the agriculture ministry seeking a cut in PM-KISAN allocation in 2020-21 Budget by almost Rs 15,000 crore, the Centre has retained its allocation at Rs 75,000 crore in BE 2020-21, to cover almost 145 million farmers.

So far (till March 3, 2020), enrollments under the scheme have been estimated at about 97 million, of which records of almost 90 million farmers have been validated and 85 million of them have received the first installment of Rs 2,000.

Under PM-KISAN, the Centre gives a sum of Rs 6,000 in three equal installments under PM-KISAN as income support annually to all landholding farmers.

A vast section within the government and also the experts believe that the database so generated through PM-KISAN could be used more intelligently, so that it gradually forms the master database for transfer of most Central subsidies directly into the bank account of growers.

At present, a dashboard has been created in the PM-KISAN website which contains details of most Central government schemes for farmers and their updated progress numbers.

Going forward there could be attempts to use this information more efficiently as PM-KISAN will provide the government with a ready database of all land holding farmers.

Already, the database is being used to identify beneficiaries for PM’s Pension Scheme for farmers.

It is here that things could get slightly complicated because unless tenant farmers are incorporated into the scheme of things, actual direct transfer of subsidy of government schemes into the account of farmers will remain an exercise in futility.

The reason for this is that studies by former head of NITI Aayog panel on land reforms, Professor T Haque, show that about 57 per cent of the leased area in the kharif season and 54 per cent in rabi were on short-term leases and did not have tenurial security and stability.

This are big numbers and unless massive reforms are introduced in this field, much of benefits under PM-KISAN, or for that matter any attempt to improve the model will not benefit absentee landlords and tenant cultivators.

In the immediate future, fertiliser subsidy is one major area where subsidy could be transferred directly into the bank accounts of farmers using the PM-KISAN platform.

The 2020-21 Budget allocation shows that subsidy for the sector has been slashed by almost 11 per cent in BE as against the revised estimate of 2019-20.

This cut, which comes at a time when unpaid subsidy dues from last year had risen to almost Rs 40,000 crore, has raised questions as to whether the government wants to rationalise fertilizer subsidy in the months to come or just roll it over the next year.

One theory is that the allocations have been slashed as the Centre believes that there could be savings if a DBT model is adopted using the PM-KISAN database. How far this is true remains to be seen because reports have indicated that the fertiliser ministry has raised serious objections to the cut in allocations.

It is not that the PM-KISAN database is foolproof. Reports show that almost 7 million entries have been returned to the state for correction in various items such as Aadhaar details and bank account.

These beneficiaries will get their installment as and when the errors are rectified either at their own end or by the government.

A report by Wire based on RTI replies showed that less than three out of 10 farmers received the full Rs 6,000 due to them in the first full year of the scheme.

The data also reveal that the pace of implementation of PM Kisan has slowed considerably since the Lok Sabha elections of 2019.

Of the 90 million farmers registered under the scheme, more than half were registered in the first period of implementation that ended before the elections.

“The pace of registration thereafter has dipped,” the report said. Though the report blamed bureaucratic slackness for the drop in enrollments, an official explanation said that as soon as Aadhaar seeding became mandatory for establishing eligibility for the second instalment under PM-KISAN, the disbursal rate dropped.

“In several cases, the name mentioned in the Aadhaar card didn’t match with the bank accounts or vice versa, leading to rejection of payments in an automated system,” a senior official remarked. The land details also proved a hindrance in some places.

Unless, these lacunae are ironed out, using the PM-KISAN database for any other benefit will not be free of hitches. 

Sector (in Rs cr) 2015-16* 2016-17* 2017-18* 2018-19* 2019-20** 2019-20# 2020-21**
Agriculture & allied activities 23,694  50,184  52,628  63,259 1,51,518  1,20,836  1,54,775
Rural development 90,235  1,13,877  1,34,973 1,32,803  1,40,762 ,143,409 1,44,817
Fertiliser subsidy 72,415  66,313  66,441  70,605  79,996  79,998  71,309
Food subsidy 1,39,419  1,10,173  1,00,282  1,01,327  1,84,220  1,08,688 1,15,570
Petroleum subsidy 29,999  27,539  24,460  24,837  37,478 38,569 40,915
*Actuals; **Budget Estimates;  #Revised Estimates;  Source: Budget Documents

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