Agriculture income support: Telangana breaks new ground in farm subsidy

By: Sreenivas Janyala

Come May, every Telangana farmer would receive a subsidy of Rs. 4,000 per acre from Chief Minister Sri K. Chandrashekar Rao-led state government, which is expected to meet a major part of their seed, fertiliser, pesticide and field preparation expenses.

The Rs. 4,000 per acre amount is to be distributed ahead of the 2018 kharif season from June, and will be followed by a second tranche in October prior to the rabi plantings. The total subsidy sum of Rs. 8,000 per acre, targeted to cover about 72 lakh farmers, is projected to cost the state exchequer a whopping Rs. 9,600 crore, Rs. 5,600 crore in kharif and Rs. 4,000 crore in rabi.

“Rs. 4,000/acre is what our farmers spend on an average towards purchase of inputs and field preparation for various crops. This, along with our recent free 24-hour power supply scheme (for the state’s 23 lakh-plus agricultural pump-sets), should take a huge burden off farmers’ shoulders. They would now only have to bear the expenses on hiring farm labour,” claimed Pocharam Srinivas Reddy, Telangana’s agriculture minister.

The new ‘farmer investment support scheme’, as it is being called, and free power for agricultural pumps will together entail an annual expenditure of Rs. 16,000-16,500 crore. This is more than a tenth of the Telangana government’s budgeted expenditures of Rs. 1,49,646 crore and over 14 percent of its revenue receipts (including share of central taxes and grants-in-aid) of Rs. 1,13,083 crore for 2017-18.

The subsidy will be applicable on the entire 1.62 crore acres cultivable land of the state, while assuming that only 85-86 percent of it is farmed during kharif and 60-61 percent in the rabi season. There would be an agricultural extension officer deputed for every 5,000 acres, who will report whether or not a farmer availing the benefit is growing a crop.

Minister Srinivas Reddy clarified that the flat per-acre subsidy will be extended to all farmers and without any cap on holding size.

Thus, even a farmer having 100 acres would be entitled to an annual payment of Rs. 8 lakh.

“The survey conducted by the revenue department last October-December showed our total number of farmers at 72 lakh. 98 percent of them own less than 10 acres, about 1.75 percent between 10 and 25 acres, and only the rest 0.25 percent more than 25 acres. So, the scheme will largely benefit small farmers, even while not leaving out anybody who has land to cultivate,” said Reddy.

The Telangana government will soon distribute land ownership passbooks to all the 72 lakh farmers identified as per the revenue department’s survey. “The passbook will have the farmer’s name, land survey number, holding size in acres, Aadhaar ID, mobile phone and other relevant details. It would serve as proof of land ownership, making the farmer eligible for any such subsidy/transfer scheme. If a well-to-do farmer wants to give up the subsidy entitlement, he is always free to do so,” an agriculture department official stated.

The Rs 8,000-per-acre subsidy, significantly, will not be in the form of direct benefit transfers to the bank accounts of farmers. Instead, the beneficiaries are to be handed out cheques. The decision to make payments in cheques would allow farmers to deposit these in the banks of their choice. Also, the state government apparently does not want a situation where the subsidy transferred into accounts is used by banks to recover outstanding loans owed by farmers.

“We want the subsidy to be used for purchase of farm inputs, although there will be no precondition as such. The farmer will be allowed to use the money the way he seeks and we aren’t going to keep track of where it is going,” added Reddy.

A major criticism of the scheme — apart from the financial implications and not excluding well-off farmers — is that it leaves out tenant cultivators, who are the ones most prone to high indebtedness and committing suicide. An estimated 40 per cent of Telangana farmers comprise tenants, who grow crops on land they don’t own and is taken on lease.

“It’s a conscious decision we have taken to avoid litigation. Tenant farmers mostly cultivate based on informal lease arrangements and they have no proof of cultivating such lands. The actual landowners may well go to court if their tenants are treated as farmers and entitled to the subsidy,” noted C Parthasarathi, agriculture production commissioner and secretary of Telangana’s agriculture department.

In most states — Telangana being no exception — not only the land, but even agricultural pump-sets and electricity connections are often in the owner’s name. That makes it further difficult for the tenant to show proof of cultivating a particular piece of land. On top of that, as Minister Srinivas Reddy pointed out, the tenants keep moving and cultivate different plots from season to season. The only hope is that the actual owners would adjust downwards the rents on their lands against the per-acre subsidy drawn by them under the scheme.

The Telangana scheme comes even as Shivraj Singh Chauhan-led BJP government in Madhya Pradesh (MP) has, from the 2017-18 kharif season, been implementing a Bhavantar Bhugtan Yojana. This, too, is an income support scheme for farmers, wherein they are paid the difference between the official minimum support price and the average mandi rate for crops during the marketing season.

The MP government has already spent Rs. 1,540 crore as price deficiency payments on about 28.5 lakh tonnes of produce sold during October-December and expects to shell out another Rs. 400 crore on two lakh tonnes of kharif maize and tur (pigeon-pea) to be marketed over January-March. Besides, it has announced the scheme’s extension to the current year’s rabi chana (chickpea), masur (lentil) and mustard crops as well.

The schemes of both the states are unique, as they do not involve any physical procurement and stocking of grains from farmers. Instead, farmers are being given income support through direct government payments. What makes the Telangana scheme really different, however, is that it is totally “decoupled” from production: Farmers are getting a flat Rs. 4,000 per acre, irrespective of which crop they grow and how much quantity gets sold and at whatever the price.

As regards the fiscal cost of over Rs. 16,000 crore on both the subsidy and free power schemes, the Telangana government’s defence is simple: they will dispense with the need for any costlier farm loan waivers in future!

Source: The Indian Express

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