In PM-KISAN, some relief to farmers, but exclusion and missed income goal point to holes

When farmers hit the streets seeking minimum support price on several crops in February, the Narendra Modi government had pointed to its signature scheme – the Pradhan Mantri Kisan Samman Nidhi – to tomtom its efforts for agricultural welfare. 

But this scheme has had a list of misses too difficult to ignore. Most importantly, the promise to double farm incomes remains far behind the government’s target, and there’s no room for the landless farmer – anywhere between 2.4 crore to 5.37 crore families have been left out.  That’s besides several instances of fraud and wastage. 

PM-KISAN, however, has not entirely been without its share of hits. For example, over nine crore farmers have benefited from the seamless transfer of Rs 6,000 for every family each year. And of this, a considerable amount has gone to women – one in every four beneficiaries is a woman.

The BJP government had promised in 2016 to double farmer incomes by 2022, and had subsequently launched PM-KISAN in 2019 to enable farmers to meet their agricultural and household needs through supplementary financial support of Rs 6,000 through three instalments every year. But, according to data analysed by Newslaundry, the average national farm income in 2022 was less than 70 percent of what the BJP government had promised it would have been.  

So what has been the role of PM-KISAN? And why do farmers appear far from convinced, similar to the standoff that led to the repeal of the controversial agricultural reforms in 2021? 

Let’s take a closer look to understand its complete performance.

Changing definition

PM-KISAN is just one of the many government programmes aimed at agrarian welfare, including those linked to fertilisers and power subsidies, crop insurance, infrastructure, logistics and livestock. 

However, its cash benefits, given in three separate instalments totalling Rs 6,000 per annum, aren’t for all farmers. Since they cover just those with land, that means the scheme excludes a significant chunk – be it the 5.37 crore landless families, as estimated by the 2011 Socioeconomic and Caste Census, or the 2.4 crore with leased land, as estimated by the 2019 Situation Assessment of Agricultural Households survey carried out by the National Statistics Office.

The scheme, which came into retrospective effect from December 1, 2018, was initially only for small and marginal farmers – with combined landholding up to 2 hectares. But from June next year, the central sector scheme implemented by the Ministry of Agriculture and Farmers’ Welfare was extended to all with land, with some minor exceptions listed in the operational guidelines. 

Responsibility of states, but no survey

Responsibility for the identification of beneficiaries and ensuring the correctness of their details lies with the state governments. The benefit is only paid to those farmers’ families whose names are entered into the land records, as vetted by the state government. An exception has, however, been made for the northeast states and Jharkhand. And the cut-off date for land ownership is February 1, 2019, except in case of inheritance due to the death of a beneficiary. 

When the scheme was unveiled in February 2019 in the interim budget before the 2019 Lok Sabha elections, 12 crore farmers were estimated to be eligible, even though the scheme was limited to only small and marginal farmers.

Governments are usually expected to do some groundwork before rolling out such an expansive scheme to assess its fiscal impact – either via commissioning a survey or collating existing records from the state. But while the National Statistics Office conducted such a survey – Situation Assessment of Agricultural Households (SAAH) – in 2019, the report was released only in 2021.

The SAAH pegged the number of agricultural households in India at around 9.3 crores, different from the government’s estimate when it announced the scheme. The SAAH pool also included families farming on leased land. 

What’s behind the dip in beneficiaries?

Now that the scheme has been implemented for five years, let’s look at how many farming families have benefited. There have been 16 instalments of Rs 2,000 released to farmers, with the most recent on February 28 this year. Of these, data is publicly available for the first 14 instalments, presented in the graphic below.

Source: https://pmkisan.gov.in/

There are two notable facts.

One, the scheme adoption was fairly quick, and within 18 months of the initial announcement, over 10 crore farmers were already enrolled and started receiving cash transfers into their bank accounts. More specifically, there was a trend of increasing beneficiaries starting from when the scheme was launched till 2021-22, when numbers plateaued around 11.2 crores. 

Two, after reaching a maximum enrollment figure of over 11.2 crores in the 11th instalment, there was a massive drop in the 12th instalment – of over 2 crores, which fell further in the 13th instalment. Though the number of beneficiaries increased to 9.6 crores in the 14th instalment, that number is still 1.6 crores less than the 11.2 crore figure. 

The government has not offered any explanations for this dip. But some of the reductions were most likely due to the more robust enforcement of eligibility checks after reports of fraud started to trickle in from different states. 

In Assam, there were reports that 8.35 lakh fake farmers were transferred Rs 558 crore. In Karnataka, 4 lakh ineligible farmers siphoned away Rs 440 crore. In Tamil Nadu, nearly 6.97 lakh ineligible farmers were able to walk away with Rs 321 crore. And in Uttar Pradesh, as many as 21 lakh “farmers” were found to have received money that they shouldn’t have. 

To plug these holes, states conducted a more thorough audit to weed out ineligible beneficiaries and new compliance criteria were introduced – both of which are partly responsible for the huge dip in disbursement figures. 

If the SAAH survey results are used as a guideline, a number closer to 9 crores is more realistic than 11 crores. However, in the absence of any definitive data or explanations from the government, it is impossible to determine whether these added layers of verification have mainly corrected inclusion errors or also substantially introduced exclusion errors. But such a sharp drop in number also raises questions of potential fraud or wastage.

A former finance and economic affairs secretary of India recently called for a Comptroller Auditor General (CAG) audit to probe potential misconduct in the PM-KISAN scheme casting exactly such doubts on payments made under the scheme to “phantom farmers”.  

But beyond such allegations, the enrollment numbers and the timeframe it took to achieve them are impressive, reflecting well on the Indian state’s capacity to implement ambitious citizen-facing programs. The utility of the famous Jan-Dhan, Aadhaar, and mobile (JAM) trinity that has been the centrepiece of Modi-era welfare schemes shines in this use case. 

Keep in mind that any farmer wishing to enrol in this scheme needs to provide an Aadhar card, a bank account, and proof of land ownership. The first two are covered by JAM, but the success of this scheme is equally dependent on a solid, reliable land record system. States have been responsive to this requirement – the high enrollment numbers point to the existence of a robust land record system across all states. 

In fact, in another example of how technology is being harnessed to improve state capacity, the Department of Land Resources under the Ministry of Rural Development is striving for complete computerisation of land records and has already reached 94 percent of its goal as of August 2023. An electronic database of land parcels will only further streamline PM-KISAN enrollment and eligibility determination.

Women enrollment

The archetype of the Indian farmer is a male figure. However, it is encouraging to note that a significant portion of beneficiaries are women. The exact number is dynamic, just like the total enrollment figures. In March 2023, over 3 crore women were benefitting from the scheme, but that number had dropped to just under 2 crore in February 2024, with the total number of beneficiaries at 8.71 crore. It is safe to say that roughly one in four beneficiaries enrolled in the scheme is a woman, which also mirrors the distribution of new enrollees released in January 2024.

The budget and minor bumps

Source: Budget documents, Ministry of Finance

The charts above, based on Central government data, shows that the MoAFW has been spending or allocating more than 50 percent of its annual budget to the PM-KISAN scheme every year since it was announced. So it is evident that the ministry considers this to be a high-priority scheme. 

Given that each beneficiary gets Rs 6,000 annually, the Rs 60,000 crore budgeted amount corresponds to 10 crore beneficiaries, but the actual money spent is determined by how many farmers enroll for the scheme each year and are deemed eligible.

The scheme is benefiting its targeted population without any glaring gaps, though there have been some bumps in the road. 

The scheme relies heavily on digital connectivity for authentication purposes. While most of the features, including one-time password (OTP) and e-KYC, are ubiquitous now, they pose a hardship to families on the wrong side of the digital divide or living in places with limited connectivity. But only a small fraction of the population faces these challenges.

Another criticism directed towards the scheme is that the compliance criteria keep changing, causing disruptions in payments for deserving families for no fault of theirs. At the same time, as discussed earlier, there have been known cases of people trying to cheat the system in several states. So some of the regulatory changes enforcing tighter checks, which are causing disruptions to eligible beneficiaries, may be inevitable to weed out miscreants trying to cheat the system. 

The big hole

Other than the implementation glitches described above, PM-KISAN also has a gaping design hole: the scheme completely ignores landless farmers. 

There is little consensus among official reports on the exact number of landless farmers in the country. The Socio-Economic and Caste Census (SECC) conducted in 2011 finds that 5.37 crore households in rural areas are landless. On the other hand, the SAAH report from 2019 finds that around 2.4 crore families farm on leased land. Chances are that the actual number of landless farmers engaged in tenant farming is between these two estimates. 

Even if we take the lower figure of 2.4 crore, that is a huge chunk of the farming community that misses out on the PM-KISAN benefits. If helping all farmers is the notion that drives PM-KISAN, the exclusion of landless farmers undermines that sentiment.

Impact on farmers’ income 

For the 10-crore-odd families that are covered by the scheme, what does the annual income support of Rs 6,000 mean? Let’s try to place this amount within the broader discussion of farmer incomes.

On February 28, 2016, PM Modi promised that farmer incomes would double by 2022.  Shortly after this announcement, an inter-ministerial committee headed by Ashok Dalwai was set up to formulate a pathway to doubling farmers’ income (DFI) which released its findings in September 2018. 

The Dalwai  Committee set the time frame for achieving the target from 2016-17 to 2022-23, with 2015-16 as the base year.The committee computed the base income levels of farmers in 2015-16, extrapolating from the agricultural household incomes reported in the 2012-13 Situation Assessment Survey (SAS) of Agricultural Households conducted by the National Sample Survey Organisation (NSSO). Using this extrapolation, the average annual income of a farming household at the national level in 2015-16 was estimated to be Rs 96,703 – about Rs 8,058 per month.  If farm incomes were to double in seven years (by 2022-23)the Dalwai committee estimated that the average national income of farming households should be at Rs 2,42,998 at current prices or Rs 20,249 per month. Note that this projected total income assumes that non-farm income grows 5 percent annually, and annual inflation is also 5 percent. 

Below is a snippet from this committee report that shows these figures and the state-wise breakdown of both farming and non-farming incomes of agricultural households for 2015-16 and 2022-23. 

Source: Doubling Farmers’ Income – Volume XIV

To bridge the gap between  2015-16 income levels and the desired 2022-23 income levels, total farmer income needed to grow 8.64 percent annually, and farm-derived income needed to grow 10.36 percent annually – both extremely steep goals which have not materialised. 

Insufficient dole

The last reliable estimate of farmer incomes was recorded by the SAAH survey conducted in 2019. 

The total average monthly income of Rs 10,218 translates to Rs 1,22,616 annually for 2019. We extrapolate this figure to 2022 income by using agricultural growth (computed each year as part of GDP calculations), as a proxy for farmer income growth and assume annual inflation of 6 percent for those three years. With those approximations, the average national farmer income in 2022 was roughly Rs 1,67,000 – a far cry from the Rs 2,42,998 level that was implicitly promised by PM Modi. An annual dole out of Rs 6,000 comes across as an insufficient measure to bridge this glaring gap.

That said, the target using average income is a purely notional yardstick. A different metric to gauge the impact of the amount transferred via PM-KISAN is comparing it with current income levels. A farmer who makes Rs 10,000 each month will derive more utility out of the Rs 6,000 income boost than one who makes Rs 60,000 every month. Using average income ignores this differential impact. 

According to the SAAH in 2019, 76.5 percent of farming households are marginal farmers, owning less than one hectare of land. Table 2 shows that the average monthly income of this group is the lowest, with those owning less than 0.40 hectares making the least – Rs 7,522 compared to the overall average of Rs 10,218. 

For this poorest group of farmers, PM-KISAN is arguably the most useful. But even then, it only represents a 6.6 percent income boost for 2019, which is surely welcome assistance, but not very substantive. Plus, with each passing year, annual inflation and rising incomes make the Rs 6,000 count for even less as a proportion of the income. In fact, using annual inflation numbers over the last four years, a Rs 6,000 payment in 2019 is equivalent to a Rs 4,800 payment in 2023.

This makes it clear that farmer incomes haven’t doubled from 2016, by even 2024. 

When Union agriculture minister Narendra Singh Tomar was asked for a justification in the Lok Sabha recently, he pointed out the Union government’s initiatives to meet the DFI goal, but also mentioned that “agriculture being a state subject, the state governments [should] take appropriate measures for [the] development of agriculture in the state”. 

State efforts

Seven states had rolled out income support schemes that supplement PM-KISAN.

Telangana was the pioneer in the direct cash transfer experiment. On May 10, 2018, the Telangana government launched the “Rythu Bandhu” (RB) or farmers’ investment support scheme – a cash transfer scheme – offering farmers Rs 4,000 per acre per season (which later increased to Rs 5,000). The scheme was novel when launched, not only because it was the first time cash transfers were tried with farmers, but also because it tied benefits with land ownership. Crucially, recognising the importance of proper land titling, Telangana undertook a mammoth Land Record Updation Exercise (LRUP) for the state from September to December 2017 to update land records before RB implementation. 

Interestingly, the RB scheme does not have any land ownership cap. Under RB, every individual who owns agricultural land is paid Rs 5,000 per acre for every farming season. A farmer owning 10 acres of land would receive Rs 50,000 while a small farmer owning 0.5 acres would get Rs 2,500. Critics point out that this blanket per-acre distribution method disproportionately helps large landowners who don’t need the extra income.

Despite that criticism, the RB scheme proved to be very popular and was considered to be instrumental in  K Chandrashekar Rao’s sweeping re-election victory in 2018. Within one year of its launch, other states – Chhattisgarh, Haryana, Odisha, West Bengal, and Andhra Pradesh – started cash transfer schemes to help farmers. Even PM-KISAN might have taken inspiration from Rythu Bandhu.

Each state tailors the income transfer differently. States like Andhra Pradesh, Odisha, West Bengal, and Haryana are expanding their schemes to include landless and tenant farmers. Jharkhand and Haryana are only targeting the poorest farmer groups. It will be interesting to see how many more states join this list.

Cash transfer as a policy tool

Relative strengths and weaknesses aside, the successful implementation of PM-KISAN and the state schemes listed above represents an important development. They show that cash transfers are now a viable policy tool in the Indian policy-politics landscape.  

There is a rich history of debate and discourse about cash transfers as a policy instrument. This discussion gained momentum when the Economic Survey of 2017 headed by Arvind Subramanian discussed UBI as a possible policy instrument. In the 2019 elections and even the 2024 elections, the Congress party has made Nyuntam Aay Yojana (NYAY), a UBI-type initiative, its electoral plank. 

While PM-KISAN is not UBI, it can be thought of as a quasi-UBI for rural India. Specific to farmers, it opens up the possibility of substituting government spending on fertiliser and food procurement with cash transfers. 

To illustrate, the government spent Rs 2.5 lakh crore in fertiliser subsidy in 2022-23, and 2.72 lakh crore in food subsidy that allows foodgrain (mainly rice and wheat) procurement at Minimum Support Prices (MSP). Taken together these two line items are almost 8 times the PM-KISAN allotment. Reducing or removing these subsidies and replacing them with a direct cash transfer is an important debate that is no longer relegated to academic papers. 

While the pros and cons of such a shift in policy and the attending political messaging are outside the scope of this article, PM-KISAN’s pivotal role in making UBI part of mainstream politics needs to be underlined. The actual amount transferred to each family may not be enough to offset the challenges faced by Indian farmers, but with the advent of PM-KISAN, the idea of direct cash transfers has now taken firm roots in the Indian polity.

Infographics by Gobindh VB.

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