Over-Hauling Agri-DBT Schemes

Most economists have advocated the conversion of all agricultural subsidies — whether on inputs or outputs into direct income support to farmers.

manishsiq Published On November 29th, 2022 Leave a comment

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What is Direct Benefit Transfer (DBT)

DBT is a mechanism of transferring subsidies launched by Government of India. This scheme or program aims transfer subsidies directly to the people through their linked bank accounts.
Significance of Agri-DBT Schemes:
- It is seen as transparent and simple to administer.
- It is crop-neutral (only rice, wheat and sugarcane farmers effectively get minimum support prices now).
- It does not cause distortions in input/output markets.
Agri-DBT Schemes in Existence:
- PM- KISAN: PM-KISAN provides an annual income support of Rs 6,000 to all landholding farmer families in India.
- Rythu Bandhu (Telangana): It provides financial assistance of Rs 10,000 per acre, again to all farmers owning land and without any size limit.
- YSR Rythu Bharosa (Andhra Pradesh): Under the scheme, farmer families are paid Rs 13,500 per year, which includes Rs 6,000 through PM-Kisan and the AP government’s top-up of Rs 7,500.
Limitation with the present Agri-DBT schemes:
- Tenant Exclusion: They do not reach tenant farmers, i.e. those who undertake cultivation on leased land.
- Tenants are excluded from income support and also zero/low-interest loans, crop insurance, disaster compensation and other agri-related schemes.

Rising Number of Tenant in India: According to the National Statistical Office’s (NSO) survey for 2018-19, 17.3 per cent out of the total estimated 101.98 million operational holdings (i.e. farms) in rural India were on leased lands.
- The share of such leased-in lands in the total area used for agricultural production was 13 per cent.
State-wise tenancy: Incidence of non-owners cultivating agricultural lands to be the highest for Andhra Pradesh (AP) (42.4 per cent) and Odisha (39 per cent).
- In Haryana and Punjab, the share of leased-in area is higher than the percentage of tenant holdings i.e, tenant farmers there operate relatively large holdings.
Unofficial nature: Farm tenancy agreements are largely oral, unwritten contracts and seldom recorded leases.

Learning best Practices: AP government’s agri-DBT schemes such as YSR Rythu Bharosa, Free Crop Insurance, Input Subsidy and Sunna Vaddi (zero-interest loans) technically cover tenant farmers.
- AP Crop Cultivator Rights law, 2019: It provides for the issuance of “crop cultivator rights cards (CCRC)” to persons cultivating the lands of owners under agreements with 11-month validity, and countersigned by the village revenue officers concerned.
- The cards entitle tenant cultivators to benefits under the state’s DBT schemes, besides being “sufficient” for obtaining crop loans from banks.
Expanding the scale and scope of current agri-DBT schemes.
Subsuming all existing input and output subsidies under them.

Agriculture in India is increasingly seeing both “tenancy” (landless/marginal farmers leasing in land to cultivate) and “reverse tenancy” (small landowners leasing out to better-off farmers keen to reap economies of scale).
Leasing can help both tenant and reverse-tenant farmers operate consolidated holdings, while allowing owners to take up non-agricultural employment without risking loss of their lands.