The farm economy has distinct features as against the usual household economic behaviour. About two decades back, when I was working in the farm sector, the distress, I observed, cash demand for the procurement of agriculture inputs and allied activities every year. Most of the farmers were short of liquidity and facing the issue in timely purchasing the required resources. Crop Loans are available but if earlier crop loan is due, then, it is difficult for the farmer to get a new loan, which forces the farmer to take loans from non-institutional sources. The feeling of going and asking someone for petty cash for the purpose of pre-sowing operations causes mental distress and hardship to the farmers. It is exactly at this place that the interlocking of the credit market with the product of the labour market takes place and the poor farmer is at the receiving end.
This is the exact time, when the farmers need financial support; keeping in view the crop calendar the cash requirements, mainly, come at the time of inter-cultivation and at the time of harvest. The crop loan system like Kisan Credit Card (KCC), certainly, provides credit help to the farmer. It was observed that the farmers prefer to withdraw the eligible credit available on KCC at one stroke rather than visiting the bank more often. Therefore, the most important aspect of farm household economics is the requirement of cash at different points of time in a crop year. Besides during, Pre-Sowing, Crop Growth & inter-cultivation, and harvest season, the farmer needs cash for domestic needs also.
The Pradhan Mantri Kisan Samman Nidhi Yojana (PM Kisan) scheme was launched on 24th February 2019 in Gorakhpur, UP by Honourable Prime Minister Narendra Modi. Under this scheme financial benefit of Rs. 6000/- per year is transferred into the bank accounts of farmers’ families across the country, subject to certain exclusion criteria relating to higher income status, through the Direct Benefit Transfer (DBT) mode. The amount is transferred in three equal installments Rs 2000/- every four months every financial year. The scheme provides income support to landholding farmers in India, which helps to procure various inputs related to agriculture and allied activities, and their domestic needs. The Government is trying to reach and pass on the benefits to all eligible farmer families through this scheme. This is one of the finest examples of good governance.
PM Kisan through this span of 3.5 years has successfully provided assistance of more than Rs 2 Lac crore (Source: Department of Agriculture and Farmers Welfare). The largest DBT scheme across the country. More than 1.6 crores are transferred to eligible farmers since the lockdown started in March’20 due to COVID pandemic, which is more than 80% of the total disbursement.
The scheme has many features like the process of registration of beneficiaries has been made simple and easy through a mobile app, PM KISAN portal and walk-ins via Common Service Centres in order to give the maximum benefit to the farmers. It also provides grievance redressal and a helpdesk option. Through this initiative, more than 13.5 lakh grievances have been redressed by the concerned state authorities. Significant efforts are made by the government in enabling the PM Kisan scheme, which has revolutionized the welfare framework for farmers in India.
Over the years, PM Kisan has increased the penetration of Bank Accounts, Aadhaar adoption and linkages of Banks with Aadhaar in Rural Areas. The impact of the scheme is well-received in rural areas. The scheme has a significant impact on Easing Liquidity Constraints.
India has more than half of its farming households not having access to formal credit and also those who have constraints in obtaining formal credit. While the scheme is pitched as a general cash transfer scheme for the farmers, its role in the adoption of modern technologies remains an important contributing factor in the modernization of agriculture by enhancing the productive investment by farmers.
Author Details
R S Deshpande
Former Director
Institute for Social and Economic Change
Bangalore-560072
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