Efficiencies and Loopholes of the PM Kisan Scheme

PM Kisan Scheme

The government of India has come out with a new initiative known as the PM Kisan Samman Nidhi, which will provide minimum income support to farmers. The initiative was announced by Piyush Goyal during the Interim Union Budget of India in February 2019. In this article, we will look at the Efficiencies and Loopholes of this scheme. What exactly is the PM Kisan scheme?

Modi’s initiative to modernise agriculture

PM Modi’s announcement on April 23 to extend the PM Kisan Samman Nidhi scheme to all farmers was a surprise to the entire country, but the government’s actions are showing that the government is taking the agriculture sector seriously.

The scheme, launched three years ago, has provided support for 11 crore farmers, most of whom are small-scale farmers. To date, over Rs 1.7 lakh crore has been disbursed under the scheme.

The government has taken a number of steps to modernise agriculture, beginning with the unbundling of operations in the Food Corporation of India (FCI). The government’s efforts have increased farmers’ incomes and led to record crop production and MSP purchases. Modi’s budget aims to further this progress by making agriculture smart and modern. Here are some examples of some of his policies:

In his speech at the Union Budget 2022, Prime Minister Narendra Modi highlighted several initiatives that will make agriculture in India more efficient and modern.

Among these are the development of natural farming, the use of drones and other innovative technologies, logistics improvement for delivering farm products, and great financial inclusion for farmers. Further, the government is implementing a number of initiatives that will improve the efficiency and productivity of the entire agri-value chain.

Under the new government’s plans, agri-waste management and natural farming will be given greater importance. Measures such as Waste to Energy will boost farmers’ incomes.

The government also plans to make more than 1.5 lakh post offices as regular banks for farmers. Agri-waste will be recycled to create electrical energy and reduce dependence on imported fuel. These are just a few of the initiatives outlined in the government’s latest Budget.

The government has been working to promote agri start-ups and modernise agriculture through various programs. PM-KISAN (Promote Agricultural Mechanisation for In-Situ Management of Crop Residue) aims to provide minimum income support to farmers in the form of cash transfers. The cash transfers are meant to be paid in three equal instalments of Rs. 2000 every four months to the beneficiaries.

The government has rushed through three bills to reform Indian agriculture. The new laws aimed to empower farmers and ensure that they can sell directly to buyers without the help of middlemen. However, the implementation of these reforms has been met with criticism.

Many farmers have complained about the lack of transparency in the process, and the government’s new laws have yet to show any tangible benefits for farmers. However, the government has argued that the new laws will help make farming more profitable.

Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act 2017 has also been introduced. This legislation provides for notification of the entire state as a unified market and permits farmer-consumer markets and direct marketing.

The Model Act also enables the introduction of e-trading and unified single trading license. Further, the Act provides for more competition in the agricultural sector, thus making it more attractive for farmers.

Efficiencies of scheme

The Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme aims at providing liquidity support to farmers and ease their cash-flow constraints.

This study uses data from 1,406 farming households in Uttar Pradesh to explore the accuracy of the scheme’s targeting and correlates with spending patterns. It uses triple difference estimation with matching estimators to measure the differential impact of PM-KISAN on Krishi Vigyan Kendras beneficiaries.

The PM Kisan SAMPADA Yojana will provide infrastructure and enhance supply-chain management, boosting the Indian food-processing industry.

In addition, the scheme will provide better returns to farmers by doubling their incomes and increasing their exports of processed food. While this sounds like a lot of work, the PM-KISAN scheme is already having a positive impact on farmer’s lives.

The transfer under PM-KISAN is invariant with regard to landholding, which lends it a progressive character. On the other hand, it may not exclude a large proportion of the poor households, who have a low level of agricultural expenditure.

The PM-KISAN scheme is designed to target the bottom end of the income distribution, but this is not clear how beneficiaries are selected. It may also favor small-scale farmers.

The PM-KISAN scheme was launched in UP on February 15, 2019. The government claims that two-thirds of the target beneficiaries will have received a stipend under the scheme by September 15th.

But how effective is the scheme? The upcoming survey should reveal whether the PM-KISAN scheme is actually improving farmer livelihoods. The Indian Council for Agricultural Research and International Food Policy Research Institute conducted the survey between May and July 2019.

The income support will be paid directly into beneficiary bank accounts in three equal installments of Rs. 2,000 each. The Union Government will fully fund the scheme in 2019-20.

The scheme covers small and marginal landholder families (SMLFT), who collectively own up to two hectares of cultivable land. For these families, income support is a critical element to overcome poverty. But the scheme’s success relies on the beneficiaries’ willingness to engage in a new business.

PM-KISAN had a major role in the scheme, but other cash transfer schemes may be leveraged to reduce the farmers’ liquidity constraints. Moreover, PM-GKY includes the PM-KISAN component and PM-UY and PM-JDY components.

All these components, combined, provide a fungible cash transfer scheme for farmers and their families. This fungibility of benefits in the PM-KISAN scheme is an important characteristic of the scheme.

In terms of impacts on purchasing of inputs, the PM-KISAN scheme, as well as the PM-UY program, had positive effects on seed procurement. While both schemes had a marginal effect, both programs increased the likelihood of seed purchases by 12%.

In terms of the benefits, the PM-KISAN scheme is clearly having a positive impact on farmers’ cash flow and purchasing of seeds, fertilizers, and pesticides.

Loopholes

A probe into the scam has identified loopholes in the implementation of the PM Kisan scheme in Assam. Assam was among the states in which the scheme was introduced, with about 11 lakh bank accounts wired to beneficiaries.

The scheme, however, had several problems that led to a series of fraudulent claims. The CSC operators say that the process was not transparent and that beneficiaries were given money without proper verification.

Farmers’ spending patterns are affected by when the PM-Kisan benefits are disbursed. Farmers have spent the first installment of their PM-Kisan money on farming while the second installment was spent on other activities.

It appears that farmers are spending the money they receive on education and incidental expenses. While the scheme is meant to support modern agricultural practices, it seems to be generating more waste than benefit. In an effort to address the problem, the KVKs have been set up in the rural areas to promote modern agricultural technologies.

Another problem with PM-Kisan is that many eligible farmers are not receiving the funds. In Assam, only 12 lakh farming families received the last instalment, compared to the 60 lakh estimated during the 2010-2011 census. This problem is compounded by the fact that only about half of these beneficiaries are women.

In other words, PM-Kisan has failed to reach enough farmers in rural Assam. But recently, the PM-Kisan scheme has begun to reach more eligible farmers. Now, the scheme has been extended to horticulture farmers and temporary allotted land.

The prime minister’s flagship scheme, the PM-KISAN, has generated serious debate in the policy discourse in India. The scheme is aimed at easing the financial constraints faced by poor farmers.

The benefits are transferred directly to the beneficiary’s bank account, which is meant to prevent leakage. Some farmers, however, did not receive their benefits until the deadline passed. The PM Kisan website offers tips for beneficiaries to avoid these issues.