Minimum Support Prices for Agricultural Produce

Time to evaluate and merge income support schemes


From UPSC perspective, the following things are important :

Prelims level: MSP and income support schemes of various state governments

Mains level: Paper 3-Issues with the income support schemes for farmers.

Both States and Center have income support schemes for the farmers. Coincidentally, they both suffer from common problems such as the exclusion of tiller from the benefit and identifying the landless labourers. This article floats the idea of merging all the support schemes in favour of an umbrella scheme. So, what are the solutions and how will an umbrella scheme be more beneficial? Read to know…

Not much ‘new cash’ in the relief package

  • On May 12, the PM announced that his government’s relief-cum-stimulus package would be Rs 20 lakh crore, almost 10 per cent of India’s GDP.
  • But when Finance Minister unveiled the package, sector by sector, many wondered where the “new cash” was?
  • So, it became clear that additional relief and stimulus in the system is just about 1 per cent of the GDPnot 10 per cent.
  • Much of the rest is directed towards increasing liquidity and deferring some loan payments, but not much additional cash.

Cash-transfer schemes by the state governments: Chhatisgarh and other states

  • In this context, the Chhattisgarh government deserves compliments for launching the Rajiv Gandhi Kisan Nyay Yojana (RGKNY).
  • RGKNY is an income transfer scheme at Rs 10,000/acre for paddy farmers and Rs 13,000/acre for sugarcane farmers.
  • The state’s chief minister has said that the scheme will be extended to farmers of other crops — in fact, to landless labourers as well.
  • On the face of it, RGKNY will help put money directly into the hands of farmers and poor agricultural labourers.
  • In kharif 2018-19, Telangana announced a cash transfer scheme of Rs 4,000/acre, per season — this was raised to Rs 5,000/acre per season in kharif 2019-20.
  • There is a live portal that gives the details of the scheme and its progress.
  • In the rabi season of 2018-19, the Odisha government launched the KALIA scheme-Krushak Assistance for Livelihood and Income Augmentation- on a somewhat similar pattern.
  • West Bengal’s Krishak Bandhu and Jharkhand’s Mukhya Mantri Krishi Aashirwad Yojana are the other income support schemes worth mentioning.

2 Issues with income support policies and solutions

1. The beneficiary is not always tiller of the land

  • Ideally, the money of the policies should go to the real tiller.
  • But in large parts of the country, there is no record of tenancy.
  • The government data shows only 10 per cent tenancy in the country.
  • While several micro-level studies indicate that it could be anywhere between 25-30 per cent.
  • In fact, in many regions like the Godavari belt, it could be even more than 50 per cent.
  • It does not make much sense to put money into the accounts of absentee landlords.

So, what is the solution to this problem?

  • 1) The best way would be to change the tenancy laws.
  • Open up land lease markets, ensuring that the owner of the land has full rights to take his land back after the expiry of the lease period.
  • The current law, favouring “land to the tiller”, is loaded against the owner.
  • As a result, much of tenancy in the country remains oral.
  • 2) In the absence of such legal changes in land lease laws, the only way forward is to fully inform the tiller that the owner has got income support.
  • And then appeal to the owner to pass on this benefit to the tiller — or adjust the land rent accordingly.
  • Information and persuasion campaigns in radio and newspapers would increase the chances of the benefits being passed on to the real tillers.

2. Identifying the landless labourers working on the farms

  • The other issue is identifying the landless labourers working on farms.
  • Majority of them are temporary and seasonal workers.
  • And leaving the task of identification to panchayats and patwaris can open doors for large leakages and corruption.

What is the solution to this problem?

  • There have been talks in the past for synchronising MGNREGA with farm operations.
  • The synchronising will have two benefits-
  • 1)It will contain the cost of farming.
  • 2) It will ensure that those engaged in this employment guarantee scheme do useful and productive work.
  • The legal framework of the MGNREGA scheme does allow this on farms owned by people of SC/ST communities, and on the lands of marginal farmers.

 Merging Income Support Schemes: The way forward

  • The time has come to think seriously about merging income support schemes.
  • The merger will include the PM KISAN and state-level schemes, with the MGNREGA and price-subsidy schemes — food and fertiliser subsidies given by Centre and power subsidies given by state government.
  • These schemes amount to Rs 5 lakh crore — that’s a good sum of money to start a basic income cover for poor households.
  • Markets could then be left to operate freely.
  • This approach can cover landless labourers, farmers, and poor consumers — these categories overlap.
  • Let there be an expert group to look closely into the functioning of each one of these schemes and create an umbrella scheme to take care of the poor and the needy.

Consider the question-“Examine the issues with the income support schemes for farmers by the States as well as the Central government. Do you think that an umbrella scheme after merging all the support schemes will be helpful in overcoming such issues?”


Though income support schemes by the state government and the Centre are a welcome move, however, when one looks at the issues with these schemes an umbrella scheme after merging all the present schemes will go a long way in solving the problems which almost all these schemes face today.

Back2Basics: PM- KISAN

  • Pradhan Mantri Kisan Samman Nidhi (PM-KISAN)is a Central Sector Scheme with 100% funding from the Government of India.
  • It is being implemented by the Ministry of Agriculture and Farmer’s Welfare.
  • Under the scheme, the Centre transfers an amount of Rs 6,000 per year, in three equal instalments, directly into the bank accounts of the all landholding farmers irrespective of the size of their land holdings.
  • It intends to supplement the financial needs of the Small and Marginal Farmers (SMFs) in procuring various inputs to ensure proper crop health and appropriate yields, commensurate with the anticipated farm income at the end of each crop cycle.
  • The entire responsibility of identification of beneficiary farmer families rests with the State / UT Governments.

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