TODAY -

PM Kisan: Reducing risk while increasing return

Surbhi Jain and KV Subramanian *



As agriculture is intrinsically a very risky activity, where the vagaries of weather and market prices generate significant uncertainty for the farmer, the PM-KISAN scheme takes an important step in alleviating this situation towards by altering the risk-return trade-off of the farmers in their favour.

Historically, the debate in the farm sector in India has been focussed on increasing the agricultural output and to make the country self-reliant in food production. It was assumed that an increase in output will increase the producers’ (farmers’) income.

However, in reality, while agricultural production has multiplied about fourfold since the Green Revolution, the NitiAayog Policy paper on Doubling Farmers’ Income estimates that around one-fifth of farm households remain below the poverty line. Furthermore, this proportion varies hugely across states.

Taking cognisance of the agricultural distress due to low incomes, a Committee was set up to Double Farmers’ Income (DFI) in a period of five years i.e. by 2022-23. In this move to increasing farmer income, the PM-KISAN Scheme announced in the Union Budget 2019-20 represents an important step.

The scheme aims at providing assured income support of Rs 6,000 per year to small and marginal farmers. This amount will be transferred directly into the bank accounts of beneficiary farmers, in three equal instalments of ¹ 2,000 each.

While the Scheme increases the average income of small and marginal farmers, the scheme has the biggest impact in reducing the uncertainty faced by these farmers. The average annual income from cultivation for small-marginal farmers, i.e. those owning less than two hectares of land, has been estimated by DFI Committee at 29,132 in 2015-16 at current prices. Adjusting for food inflation, we estimate the current average income from cultivation of a small and marginal farmer to be 30900.

The assured annual income support of 6000 thus adds around 20% to his average income. Of course, this average income masks variation among farmers, where many farmers may earn substantially lower than the average and thereby remain at a subsistence level of income while others may earn much more than the average. As the increase in the return would be significantly higher than 20% for the farmers earning much lower than the average, an assured annual support of 6000 provides great source of succour for such farmers.

The assured income under the scheme reduces the risks faced by a farmer significantly. A farmer faces risk from the uncertainty in crop yields because of the vagaries of the weather and the volatility of the price that he procures for his produce in the market. A recent study undertaken by Prof. Ashwini Chatre at the Indian School of Business and his co-authors shows that the volatility of prices of agricultural commodities ranges from 2 to 40 times the average price; this volatility is the lowest for rice and wheat, medium for tomato, cabbage and onion, and the highest for cauliflower and capsicum.

Even if we ignore the volatility in production, the volatility in the average income of a farmer that stems from the volatility in prices ranges from twice the average income for farmers growing rice and wheat to 40 times the average income for farmers growing cauliflower and capsicum. Given this uncertainty, we estimate that in one out of three four-month periods a farmer growing rice or wheat may receive an income less than Rs. 2000.

Thus, in one out of three four-month periods, the 2000 provided by PM-Kisan can double his income in that 4-month period. A small or marginal farmer growing any other crop (tomato, potato, onion, cauliflower or capsicum) is likely to face even greater uncertainty. As a result, the 2000 reduces his uncertainty even more than that for a farmer growing wheat or rice.

As small and marginal farmers constitute 86.2% of all farm holdings, PM-KISAN benefits a significant majority of the vulnerable farmers. As a positive ‘side-effect’, the assured income also makes it easier for small and marginal farmers to get institutional loans especially from Microfinance Institutions and Self-Help Groups.

As RBI has recently raised the limit for collateral-free agriculture loans to small and marginal farmers to 1.6 lakh from 1 lakh, the effect of the assured income provided by PM-Kisan will get magnified through greater liquidity for farmers.

A loan waiver, in comparison, may act as a temporary healer to the farmers but its reach to small and marginal farmers is under doubt given that small and marginal farmers take more than 50% of their loans from non-institutional sources as evident from data from Agricultural Census, 2015-16.

A loan waiver also leads to moral hazard as those farmers who are able to pay their loans might not pay it expecting a waiver. Various studies have also shown that such loan waivers are often cornered by non-distressed farmers leaving the small and marginal farmers in the lurch. It also disrupts the discipline of the credit market, adds to the NPAs of the banks and increases the burden on the exchequer.

Thus, this income support scheme underlying PM-Kisan, which is specifically targeted at the small and marginal farmers, is a critical step in supporting the constituency that is entrusted the responsibility of feeding a 125 crore mouths.


* Surbhi Jain and KV Subramanian wrote this article for The Sangai Express
Surbhi Jain is a Director and Dr KV Subramanian, Chief Economic Advisor (CEA) in the Ministry of Finance
This article was webcasted on March 04, 2019.



* Comments posted by users in this discussion thread and other parts of this site are opinions of the individuals posting them (whose user ID is displayed alongside) and not the views of e-pao.net. We strongly recommend that users exercise responsibility, sensitivity and caution over language while writing your opinions which will be seen and read by other users. Please read a complete Guideline on using comments on this website.




LATEST IN E-PAO.NET
  • Renu Takhel: UN Human Rights, Geneva
  • Hunting in the Himalayas :: Book Review
  • Justification: against Meeteis ST demand
  • The Killing Fields 2013-18 : News Timeline
  • Executive Committee 2019 of BMSA
  • Google Workshop on Journalism
  • High level of air pollution
  • Way to go as but hopes stir
  • CCpur Dance @Keibul Lamjao : Gallery
  • The East Wind from Yunnan
  • Journey into Nature of Human Culture #1
  • Yaoshang Thabal :: Poem
  • North East NSS Festival begins
  • Talking... ending social media introversion
  • Opposing stand on ST demand
  • Kounu Lairembi Haraoba #1 : Gallery
  • Nipalsuba Mapok : Shumang Leela
  • Women's Bill : A passage to nowhere?
  • Challenges in elderly for medical tests
  • All's fair in love in war: Nitza :: Review
  • Why I write ?
  • Looking back to 2012, 2014 elections
  • Mukna Kangjei #2 : Gallery
  • Mova Cave of Hungpung in Ukhrul
  • Catapults, Molotov Cocktails & Music!
  • Appeal for Meitei's demand for ST
  • Inner Line Permit (ILP) Demand :: Timeline
  • Google News Training for Journalists
  • Of Crimes Against Humanity :: Poem
  • Bedtime beauty hacks to look young
  • Mary Kom to skip Asian championship
  • Thabal chongbagi SenKhaiba : Gallery
  • Zeliangrong women: Role in society #2
  • Eyek Tamba :: Learn Manipuri script
  • Cry of a Dying River - 69 :: Poem
  • Nationality & Gorkha statehood movement
  • Free Children Heart Surgery Camp
  • Workshop on Python Programing at MU
  • Lining up for BJP, Cong
  • Indian Politics after Pulwama Terror Attack
  • Sory Wahengbam : eRang Actress Profile
  • International River Day @ Nungbrung Village
  • Nongthombam Biren: People's CM
  • Can Jamir Do A Lazarus ?
  • Dr. Shantibala's The Sacred Witch :: Review
  • Rural development process
  • Eyeing 22 out of 25 in North East
  • Interfering the media
  • Myanmar army cracks down on NSCN (K)
  • Phayeng Koubru Haraoba #2: Gallery
  • Chirangchaibi, Abenao :: eMing
  • Komorebi - The Longing :: Poem
  • Little love in twilight of life
  • Election code of conduct anytime
  • Surveying India's unemployment numbers
  • DAMMS' statement on Meitei ST Demand
  • Choosing the right candidate
  • Demand for ILP :: Articles/Photos...
  • The Innampei festival of Chothe #2
  • CC Meet: SU vs NACO : Gallery
  • AEbu tuMduna lEKi gad_ra :: Seireng
  • That Hurts :: Poem
  • Workshop on Statistical Data at MU
  • The International Women's Day
  • Politics : A way of life !
  • Celebrate festival of democracy responsibly
  • The truth unfolded
  • Nipalsuba Mapok #1 : Gallery
  • Maisnam Renuka's Painting : Gallery
  • Parental Alienation: Poem 2 : Poem
  • The cost of a vote
  • Motivation & rewards for development
  • Career options in Commerce stream #2
  • Forest rights more than nine-tenths
  • Setting back final deal by 60 days
  • Traffic woes
  • slams Nagaland CM's statement on ILP
  • Symbolism in the Tribal Art #4
  • Laiphrakpam Ashok Kumar: Akademi Award
  • ST Demand Rally [Mar 3] #2: Gallery
  • Mee Manukhang will not be televised
  • Govt should grant prosecution sanction
  • Zeliangrong women: Role in society #1
  • General Strike mapung fana chathari
  • Rolling out Lok Sabha schedule
  • Saroi Khangba @Imphal : Gallery
  • 'Women Health' Workshop : Gallery
  • Manipuri Muslims Conference : Report
  • Meetei ST demand bu lanna uhanbiganu
  • Caveman & Children of (19)70s : Poem
  • Workshop on "Women Health" at Pune
  • Natural facial at home for glowing skin
  • Inauguration of NSS Camp at ADBU
  • Changing Manipur - which direction ?
  • Nongkhrang Ehanba @Lilong #2 : Gallery
  • Cessation of hostilities to POW
  • Magical power of music
  • Intl Women's Day requires regrouping
  • General Strike Mapung Fahanbiyu
  • Pravish's Case disposed by CJM
  • NSS Camp at Assam Don Bosco
  • Former Cong leader welcomed at Dimapur
  • Never asked India for land quip
  • Issues of women's rights
  • Barak Fest @ Senapati #2 : Gallery
  • Featured Front Page Photo 2019 #1: Gallery
  • Reading Megh-dut in Manipuri #2
  • To be a woman and to be in India
  • Cry of a Dying River - 68 :: Poem
  • Can Meitei/Meetei be a tribe ?
  • Raging debate over ST demand
  • Climate change matters
  • Class X Exam @Johnstone : Gallery
  • ciH Amadi tMgi KeYnaba :: Seireng
  • Yaoshang be observed as 'Sports Week'
  • Hmar Inpui Assembly at Churachandpur
  • Jute bags versus Lenobags
  • ...Work for social justice
  • State of higher education here
  • Creating an education-friendly atmosphere
  • Shopping for Shivaratri #1: Gallery
  • 3rd World Bamboo Workshop #3 : Gallery
  • Reinvigorating the Awl-len festival
  • I am a poet :: Poem
  • Roles of Members of Parliament
  • Don't just age gracefully - Age beautifully
  • SRF/JRF for Mizoram University [Upd]
  • ST status campaign : An overview
  • May be this time it may happen
  • ST Demand Rally [Mar 3] #1: Gallery
  • Sanaroishingee Nunit : Gallery
  • Rejoinder to TNL's Diatribe on the Kukis
  • Schemes of Panchayati Raj #2
  • Career options in Commerce stream
  • 3 Resolutions from ST Demand Rally
  • NPF on Nagaland Budget Session [Feb 25]
  • LS elections :: Key : Choice of candidates
  • Price of development
  • Phayeng Koubru Haraoba #1: Gallery
  • Nagaland Dance @Sangai Fest : Gallery
  • Bad Boy Eats the Yellow Snow
  • Name :: Poem
  • Alcohol prohibition
  • Treading murky waters
  • PM Kisan: Reducing risk..increasing return
  • Rallying around ST demand for Meiteis
  • Myanmar Army takes control of NSCN (K)
  • Henjunaha #3 :: Funga Wari
  • Reading Megh-dut in Manipuri #1
  • Purnima Ngangom's Painting : Gallery
  • Impact of Anglo Manipur War 1891 #2
  • Naga Peace Process :: News Timeline
  • Lived across LoC
  • Most Beautiful Woman in World : Poem
  • CAB no more issue
  • Traditional Raas Dance #2: Gallery
  • Cultural @Republic Day #2 : Gallery
  • RS adjourned without CAB: What now? #3
  • Retrospection on Sport person's Day
  • Marriage ceremony : Zeliangrong & Tai #3
  • Thadou Inpi & TSA not under KIM & KSO
  • Bioscope show
  • The haunt continues
  • Positive change in behaviour of cops
  • Maharaj Kumar Priyabarta Singh : Profile
  • March Calendar for Year 2019 :: Tools
  • CV Raman & National Science Day
  • Cry of a Dying River - 67 :: Poem
  • Tour of laboratory by a blood sample
  • MU celebrate National Science Day
  • Science Day at DM Community College
  • Displeasure over attitude of PDA :: NPF
  • The making of a united India
  • Morning air raid at JeM camp
  • Lui-ngai-ni @Senapati #3: Gallery
  • Arunachal PRC Issue: Vis-a-vis Gorkha
  • Literary representation of political violence
  • Understanding distance learning
  • Good governance required in Arunachal
  • Save energy, ecology & humanity
  • Framing of guideline for school transporter
  • Yubi Lakpi #1 : Gallery
  • Holi Pala @Sangai Festival : Gallery
  • Indie films: Loktak Lairembee & Soni #2
  • Workshop on Python Programming at MU
  • They say :: Poem
  • Election manifesto for all & sundry
  • Camellia oil for heavenly beauty
  • Programme on Road Traffic Safety
  • PRC: Appeal to Governor of Arunachal
  • Towards optimistic ideology
  • The task ahead of STDCM
  • The Innampei festival of Chothe #1
  • My encounter with a Japani
  • Korean Seminar of Hangeul Day at MU
  • Total ban on polythene bags need of hour
  • The Masked Painter :: Poem
  • Arunachal Issue : Representation to HM
  • The Consumers' Rights
  • CAB in a new avatar ?
  • Singcha Wuya Won @Kamjong #2 : Gallery
  • Konthoujam Maikel's Painting : Gallery
  • Impact of Anglo Manipur War 1891 #1
  • RS adjourned without CAB: What now? #2
  • Hole in the bag :: Poem
  • Climate change: Dual perspective
  • Pui Jianna Thangamliu :: eRang
  • March Past: Republic Day: Gallery
  • Dark light and The Wishess' might
  • Manipur on Meitei edge
  • Belshazzar's feast - A failed mission
  • Education in the era of Google
  • Healing is different from cure ....
  • RPL trainees of Garo Hills - II
  • MHA "notification"
  • Nagaland- Feb 26 : Sense of urgency
  • Lui-ngai-ni @Senapati #2: Gallery
  • Police check @Jirimukh, Jiri : Gallery
  • Nongkhrang Ehanba @Lilong #1 : Gallery
  • Traditional Raas Dance #1: Gallery
  • Rajkumar Singhajit : Tagore Award 2014
  • Mukna - Indigenous Games : Gallery
  • Dzukou Valley, Senapati : Gallery
  • Amuktang-Ga Haikho #2 : eRang
  • Thamoise Foidattuna :: e-pao Radio
  • Check Post (ICP) @ Moreh : Gallery
  • Konthoujam Maikel (Painter) :: Profile
  • Onetwo Okram : Singer- Profile :: eRang
  • Imoinu Erat Thouni #3 : Gallery
  • Manipuri Calendar for 2019 : Download
  • List of Restricted Holidays for 2019
  • List of Public Holidays for 2019
  • List of General Holidays for 2019
  • SPONSORED ADS