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The need for an income support scheme for farmers

The need for augmenting farm incomes

  • One of the problems of implementing a universal income support scheme for farmers is that land sizes differ across states, and there needs to be more quality data available on land holdings. Government data show only 10 percent tenancy in the country, while some other studies have put the figure at 25- 30 percent. Hence, the central government must enable a data collection model but allow the states to set requirements for income support. This would prevent leakages and ensure income support is not given to absentee landlords.
  • The total expenditure of paddy cultivation over one hectare in Andhra Pradesh is Rs 80,303, whereas, in Uttar Pradesh, the expenditure of paddy cultivation for the same area is Rs 58,429. Hence, there is a need for states to conduct surveys to estimate farmers’ income independently. Currently, the two surveys- National Account Statistics and NSSO generating estimates of farmers’ income adopt different definitions of farmer households and vary significantly in their final estimates. This will build strong data for better analysis and enable a more localized approach.
  • It is axiomatic that as Centre controls the finance, they also exercise control in planning policies. But such a universal approach will not transfer the benefits effectively. There needs to be scope for the states to model the cash benefit transfer based on the crops that can be produced locally with limited expenditure. This will incentivize farmers to move away from growing crops that attracted high MSP due to a universal policy.
  • A National Bank for Agriculture and Rural Development (NABARD) survey revealed that the average landholding size of a rural household has shrunk to 1.1 hectare (Ha) in 2015-16 from 1.6 hectare in 2012-13. The role of the states in identifying the reasons for the shrinking of the land is vital for avoiding disguised unemployment and providing alternative jobs for the excess workforce. An income support scheme would support existing central schemes like Mudra loans.

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