Jagan’s farmer incentive scheme: A palliative, not a panacea

Updated 12:28 PM, 11 June, 2019
Experts say that cash payouts to farmers, as planned by Andhra CM Jagan Mohan Reddy, under any name, can only serve as palliative but cannot be a panacea for the agrarian crisis.

During the 3,400 km long padyatra across Andhra Pradesh that propelled him to power, the YSR Congress Party president Y S Jagan Mohan Reddy was moved by the plight of farmers. One of his first set of assurances during the mass contact programme was that his party, if voted to power, would provide direct cash benefit to farmers to meet their investment requirements.

As his set of nine promises, called ‘Navaratnalu’ (the nine gems), caught the imagination of the people, the then Telugu Desam Party government headed by N Chandrababu Naidu came up with a counter offer–‘Annadata Sukheebhava’, an incentive scheme for farmers–just a month before the announcement of election schedule.

Soon after swearing in as the Chief Minister, Jagan scrapped the earlier scheme and launched “Rythu Bharosa” under which every farmer, holding up to five acres of land, will be given financial assistance of Rs 50,000 over the next four years in four equal annual instalments of Rs 12,500 each.

Though his party’s manifesto had promised to launch the scheme in 2020, the implementation schedule has been advanced and it will now be launched on October 15 this year.

How is it different?

The TDP government’s scheme promised to give Rs 15,000 per year to each farmer. However, this amount included Rs 6,000 from the Central government’s Pradhan Mantri Kisan Samman Nidhi. Effectively, the state’s contribution was Rs 9,000 to be given in two equal instalments.

“The new scheme is an improvement over the previous one and it is over and above the benefit that flows from the PM-Kisan scheme. And, the amount (Rs 12,500) is given at one go,” an official of the state agriculture department said.

More importantly, unlike the “Rythu Bandhu’ scheme, being implemented in the neighbouring Telangana, it will cover tenant farmers as well. The main criticism against Telangana’s scheme, under which Rs 10,000 is given per acre per year in two equal instalments, is that it excludes tenant farmers.

“Rythu Bharosa” entails an annual commitment of Rs 13,125 crore. “Out of this, the tenant farmers will receive about Rs 2,500 crore annually. The cash will be directly credited into their bank accounts,” the official said.

A total of 70 lakh small and marginal farmers are expected be benefited by cash dole-out. Over 60 percent of the state’s 5.3 crore population is engaged in agriculture and allied services.

“The Rythu Bharosa, coupled with a market stabilization fund of Rs 3,000 crore being proposed in the coming budget, will have a transformative impact on the farmers,” the official said.

Palliative, not a panacea

Experts say that cash payouts to farmers, under any name, can only serve as palliative but cannot be a panacea for the agrarian crisis.

While the shift towards Direct Income Support measures is in itself an innovation, not enough care has been taken in designing these measures and institutional mechanism for determining the quantum of support, said G V Ramanjaneyulu, the executive director of the Centre for Sustainable Agriculture.

The mechanism to identify and deliver to targeted community and plans to long term sustainability is missing, he says.

Though the Andhra Pradesh scheme aims to include tenant farmers, there are practical difficulties in identifying and extending the cash benefits to them.

“All transactions relating to tenancy happen through oral agreement between the land owner and tenant farmer. There will be no official records,” said the YSRCP farmers’ wing president M V S Nagi Reddy.

Jagan’s promise is unlikely to help tenant farmers unless the AP Tenancy Farmers Act, 1956, is amended. As per the provisions of the act, the tenant farmer will have the right to cultivate the land for a period of six years once the tenancy is recorded on paper. In case the land owner wants to sell the land, he or she will have to compensate the tenant farmer to the tune of five times the lease amount.

As a result, the land owners are not willing to enter into any written agreement with the tenant farmers but opt for oral agreement. This practice makes it impossible for a tenant farmer to get benefits from government schemes.

The Telangana government has excluded tenant farmers from Rythu Bandhu scheme to avoid stirring the hornet’s nest. “At present, the scheme entails an annual expenditure of Rs 12,000 crore, benefiting 57 lakh farmers,” the state agriculture secretary C Parthasarathi said. The amount is meant for purchase of inputs like seeds, fertilizers and pesticides and to meet the labour costs.

Lacunae

While Rythu Bandhu is hailed as a transformative policy initiative, marking a shift from higher MSPs or loan waivers to direct income support, its biggest lacuna lies in the exclusion of the tenant farmers who cultivate nearly 30 percent of the land in Telangana.

“It is like applying an ointment for a patient who needs to undergo surgery,” says the state Congress spokesperson D Sravan.

However, the officials say that any attempt to modify the scheme would amount to “stirring the hornet’s nest”. “This is Rythu Bandhu, not tenant Bandhu scheme. We might get caught in a legal quagmire if we extend the benefit to tenant farmers. Moreover, there are no official government records that recognize tenant farmers,” a top official of the agriculture department said.

However, experts point out that a comprehensive land survey should have been carried out and identification of cultivators should have been done before rolling out the scheme, touted by the government as a revolutionary initiative to redefine the agricultural policy in the country.

“Unfortunately, it has become an incentive scheme to land owners. The payments are being made only based on land ownership, irrespective of who is cultivating it. The payments are even made to NRIs and also for lands which are left fallow for long due to conversion into real estate,” Ramanjaneyulu said.

“Neither Rythu Bandhu nor PM-KISAN will be sustainable without a focus on basic resources such as soil fertility and water availability. Rather than celebrating the record paddy production in a dry region, what the government needs to do is to incentivise the cultivation of pulses, oilseeds and coarse cereals. These are the kinds of crops the land here is suited for,” says Divya Veluguri, a researcher with the Centre for Sustainable Agriculture.

Accessing data

The government’s argument that there is no credible data available on tenant farmers is a specious one. “There are studies by the RBI, Niti Ayog and other institutions on tenant farmers. Besides, the Telangana Social Development report (NSSO) has estimates of cultivators,” Ramanjaneyulu said.

In 2011, the then Congress government in the united Andhra Pradesh came up with a plan to issue Loan Eligibility Cards for tenant farmers. However, in the last five years, very little has been done on this front. The government should have used the LEC as the basis for identifying cultivators.

Though the government expects the land owners to pass at least a part of the benefit to their tenant farmers, it simply does not happen, points out Peddireddy Chengalreddy, an agricultural expert. In Telangana, farmers pay landlords a fixed amount to rent the land each year.

The farmers whose lands were notified to be acquired under irrigation or other government projects have been excluded from the scheme though land acquisition is not complete and farmers are continuing farming. And, farmers without Adhaar linkages have also not received the benefit.

Uniform payment

“While the costs of cultivations and risk in agriculture is not same across the situations and across the socio economic status, a uniform payment may not help the farmers in distress. There should be differentiation based on crop type, region and irrigation status. Moreover, the absence of a payment ceiling can create a peculiar situation where the 9 percent of landowners holding more than five acres of land accrue 34 percent of the scheme’s total payout,” argues Ramanjaneyulu.

There should be an institutional mechanism to make an assessment of the quantum of support and link it to inflation to have annual upgradation, like the dearness allowance for employees. As the state government took per acre approach, small farmers who have less than an acre got very little amount in proportion to their land. “Rather, it should be a fixed amount below one acre. There is also a need to fix a maximum ceiling or else land accumulation will be encouraged,” he says.

“The main objective of any direct income support scheme is to support the shortfall in income. In that case, it should focus on cultivators irrespective of their land ownership status. Telangana state has completely gone wrong on this front,” Chengalreddy said.

Way forward  

Fiscal burden is a key area of concern. While announcing such schemes, the governments don’t seem to take into consideration the required finances and their implication on other programmes. Both AP and Telangana governments are already heavily indebted and crossed the recommended fiscal deficit limit, as made by the 14th Finance Commission, of 3.25% of GSDP multiple times.

The agrarian crisis is caused by increasing costs of agriculture, growing risk in farming, decreasing government support and un-remunerative prices for the produce.

“The national agricultural policy should focus on bringing economic sustainability in farming and ensuring secure incomes. This will not only address the distress among farmers, but also generate a positive dynamic in the entire rural economy by enabling farmers to make positive investments into agriculture, by increasing their purchasing power, and by retaining more youth in rural areas,” Ramanjaneyulu says.

The Farmers’ Income Security system, he said, should be established through an Act to ensure that the institutional systems are responsive and accountable to the farmers. A Farmers Income Commission should be established to implement Income Security. This should be a permanent, statutory body which includes farmers’ representatives. Income Assessment of agricultural families should be done on a regular basis, tracking the incomes of farming households in terms of various regions, crops and categories.d farmer incentive scheme: A palliative, not a panacea