As the chorus for farm loan waiver is gaining, particularly among the political circles across the country, as a relief to farmers ahead of the general elections slated in the coming summer, a study conducted by the Indian Council for Research on International Economic Relations (ICRIER) has favoured implementation direct investment support on the lines of benefit extended in Telangana.
Three researchers of the ICRIER, a Delhi-based autonomous, policy-oriented and not-for-profit economic policy think tank, have studied an innovative scheme called Bhavantar Bhugtan Yojana (BBY), a price deficiency payment (PDP) scheme to support farmers, implemented by Madhya Pradesh government in depth and compared it with investment support scheme planned to be implemented in Telangana and Karnataka at the time of their study earlier this year.
A report on the study suggested that investment support is a better option to to help farmers on per hectare basis since it would be much simpler to implement and would be transparent and crop-neutral without causing much distortion to the functioning of markets, compared to price support scheme of Madhya Pradesh involved with many complexities.
Investment support
The report mentioned that the investment support would be in the measure of ₹4,000 per acre for two seasons in Telangana.
The study “Supporting Indian Farmers: Price Support or Direct Income/Investment Support?” carried out by Ashok Gulati, Tirtha Chatterjee and Siraj Hussain has stated that the MP government implemented the price support scheme for the 2017-18 kharif season covering eight crops with a promise to pay the difference between their minimum support price and market price, averaged for MP and two other adjoining States. An amount of ₹1,944 crore was paid to farmers as price difference which actually was about ₹8,478 crore.
However, the scheme was abruptly withdrawn before the commencement of rabi marketing season in March this year.
‘Prone to manipulation’
The ICRIER researchers observed that the price deficiency payment scheme is prone to manipulation by traders and the lower level ‘mandi’ (market) functionaries and would end up helping them more than the farmers, despite best intentions of the government.
“We have spent about ₹5,700 crore on the investment support implemented as Rythu Bandhu scheme for the 2018-19 kharif season at ₹4,000 per acre and the amount is being credited into farmers’ bank accounts for the rabi season,” Agriculture Production Commissioner of Telangana C. Partharsarathi said.
The study, however, suggested that steps such as digitisation of farmlands, linking them with Aadhaar and bank accounts and tenancy reforms, if possible, among others would make investment support scheme of Telangana wholesome.