Niti Aayog Supports Direct Benefit Transfer to Farmers

If the Niti Aayog’s proposal for an upfront subsidy through DBT (direct benefit transfer) is accepted then the farmers in the country might get annual income support of Rs 15,000/hectare.

The government think tank has suggested that all subsidies for agriculture that includes crop insurance, irrigation, fertiliser, electricity and interest subvention should be replaced by income transfer. Odisha and Telangana have adopted income support to help reduce the agrarian distress as against loan waivers that have been announced by many other states, mostly ruled by Congress. The central government has said that such debt forgiveness doesn’t solve the root cause.

The agriculture sector is given input subsidies worth over Rs 2 lakh crore every year. Based on the total cultivable area in the nation, it amounts to Rs 15,000 / hectare. Some policy makers and experts contend that subsidies are not evenhanded. And in many cases, they have a bad effect on natural resources and sustainability of agricultural production.

According to a senior government official, the idea is to move to a mechanism that deals with agrarian grief, prevents the misuse of subsidised urea and power and provides economic freedom to farmers. It will also end massive leakages like subsidised fertiliser being diverted to other industries.

The official said, “The government considers that this is the only way forward to supplement the farm income. Giving money directly to the farmers would give them liberty to choose the best crop and not go only for subsidised items - whether fertiliser or free power.”

PM Shri Narendra Modi in 2015 said that the government wants to increase farm income by 2022-23, which needs an annual growth rate of over 10 percent but farm productivity has been lagging, resulting in reduced agricultural income.

It has been estimated that the agricultural income won’t be sufficient to keep as many as 53 percents of farm households out of poverty as they work on small holdings.

But, the Centre will have to convince states to take part in such a programme. Half the agricultural subsidies are contributed by the states in the form of discounted power and canal irrigation, etc. The fertilizer subsidy comes from the central government and that on seeds is shared between the two.