Indian Economy

Model Answer

Introduction

PM-KISAN, launched on 24th February 2019, is a Central Sector Scheme aimed at providing financial assistance to landholding farmers. The scheme offers an annual financial benefit of Rs 6,000, paid in three equal instalments, directly transferred to farmers’ bank accounts through Direct Benefit Transfer (DBT). It has been a crucial intervention in addressing agrarian concerns and fostering rural growth.

PM-KISAN’s Role in Addressing Agrarian Concerns

1. Income Stability
   • The Rs 6,000 annual payment provides a stable source of income, helping farmers manage fluctuations in their income caused by unpredictable weather and volatile market conditions.
   • Example: During periods of drought or crop failure, this assistance offers crucial financial relief to small and marginal farmers.
2. Debt Relief
   • Many farmers use the PM-KISAN funds to pay off small debts, thereby reducing their financial burden and improving their creditworthiness.
   • Illustration: Small farmers have reported lower instances of distress, including a reduction in suicides due to the added financial support.
3. Reducing Input Costs
   • The financial support helps farmers cover essential input costs such as seeds, fertilizers, and pesticides, improving their capacity to manage crops effectively.
   • Example: Farmers can afford better-quality seeds, leading to improved crop yields and productivity.
4. Boosting Agricultural Investment
   • PM-KISAN enables farmers to invest in modern agricultural practices like improved irrigation systems or machinery, enhancing productivity.
   • Illustration: With this financial support, a farmer may purchase drip irrigation systems, reducing water usage and increasing efficiency.

PM-KISAN’s Contribution to Fostering Rural Growth

1. Increased Purchasing Power
   • The scheme directly boosts the purchasing power of farmers, leading to increased demand for goods and services in rural areas.
   • Example: Rural markets see a rise in the sale of consumer goods and farming equipment, stimulating local economies.
2. Investment in Local Businesses
   • The additional disposable income allows farmers to diversify their income by investing in small businesses or other non-agricultural activities, fostering rural entrepreneurship.
   • Illustration: A farmer might open a small shop or invest in a service like mobile repair, creating local jobs.
3. Agricultural Value Addition
   • Farmers with increased incomes are more likely to invest in value-added agricultural products, contributing to rural economic diversification.
   • Example: A farmer may use surplus income to produce and sell processed food items like pickles or jams, increasing profits.

Challenges Facing PM-KISAN

1. Limited Beneficiary Coverage
   • While PM-KISAN targets 125 million small and marginal farming households, only 32% of them (about 40.27 million) have benefited.
2. Insufficient Support Amount
   • The Rs 6,000 annual benefit, though helpful, covers only about a tenth of the production costs per hectare, limiting its effectiveness in solving long-term financial challenges.
3. Exclusion of Tenant Farmers and Landless Laborers
   • PM-KISAN is limited to landholding farmers, excluding tenant farmers, sharecroppers, and landless laborers, who form a large part of the rural population.
4. Market Distortions
   • Some critics argue that without accompanying market reforms, income support schemes like PM-KISAN may distort market incentives, leading to unintended consequences, such as over-reliance on certain crops.
5. Awareness Issues
   • Many eligible farmers are unaware of the scheme or find it difficult to apply.
   • Example: In Bihar, only 41% of farmers surveyed were aware of PM-KISAN.
6. Non-Farmers Benefiting
   • In some cases, non-farmers have wrongly received benefits due to inadequate verification processes.
   • Example: In Uttar Pradesh, over 12,000 non-farmers, including government employees, received PM-KISAN benefits.

Way Forward

• Expanding Beneficiary Criteria: Include tenant farmers and landless laborers to ensure wider coverage.
• Awareness Campaigns: Improve outreach through community meetings and local media to ensure that more eligible farmers are aware of and apply for benefits.
• Digital and Offline Accessibility: Strengthen both online and offline registration processes for easier access, especially in areas with limited digital infrastructure.
• Data Verification: Implement a robust system for regularly verifying and updating beneficiary data to ensure accurate targeting.
• Complementary Reforms: Integrate PM-KISAN with broader agricultural reforms and support measures like market access, crop insurance, and infrastructure improvements.