Modi government launches a massive minimum income scheme for India’s ailing farm sector

For the future.
For the future.
Image: REUTERS/Ajay Verma
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India’s 2019 budget was widely expected to be one for the farmers—and it has turned out to be just that.

The Narendra Modi government today (Feb. 01) announced the Pradhan Mantri Kisan Samman Nidhi, a scheme promising an annual assured income of Rs6,000 ($84.5) for any farmer who owns up to 2 hectares of farmland. The average farm size in India is about 1 hectare, according to the 2015-16 agricultural census.

The budget for fiscal year 2020 has allocated Rs75,000 crore for the scheme. An estimated 120 million land-owning farmer households will benefit from the scheme, interim finance minister Piyush Goyal said in his budget speech in parliament.

The government will count Dec. 01, 2018, as the start of the inaugural year of the cash transfer scheme, and an additional Rs20,000 crore has been allocated for the scheme for the ongoing financial year ending March.

The central government will transfer the assured income directly into the farmers’ bank accounts in three equal installments of Rs2,000 each, Goyal said, adding that the date of disbursing the first installment will be announced soon.

Though agriculture accounts for 17.32% of the Indian gross domestic product and employs over 50% of its population, rising costs and falling crop prices have taken a toll on the countryside. According to the 2011 census, 45 farmers commit suicide every day in India.

Since the majority of Indian voters reside in villages, addressing farmers’ demands is crucial for the Narendra Modi government as elections approach.

Farmers Quartz spoke to have a mixed reaction to the announcement. “Ask Modi to keep his Rs6,000. The farmers aren’t begging,” said Shyambhir Singh, a farmer in Aurangabad Fazalgarh village of Ghaziabad district in the northern Uttar Pradesh state. “We want an implementation of the Swaminathan report (which recommends wide-sweeping reforms in the agricultural economy).”

“I’ll be happy if I get it. Something is better than nothing,” said Amreesh Rathi, a farmer of Chhachhrauli village in Muzaffarnagar district in Uttar Pradesh.

In its earlier budgets too, the Modi government had increased agricultural spending. Yet, in recent months, thousands of farmers have been marching from villages to India’s metropolitan cities, seeking comprehensive loan waivers and higher minimum prices for farm produce. 

Opposition parties have rushed to capitalise on the rural disillusionment. Just earlier this week, the Indian National Congress party chief Rahul Gandhi announced minimum guaranteed income for individuals below the poverty line if elected.

Goyal also announced an allocation of Rs60,000 crore for Mahathma Gandhi National Rural Employment Guarantee Act (MNREGA), a rural employment guarantee scheme launched by the previous government of the Congress party.