Pm-kisan scheme: ₹6,000 is just 6% of a small farmer’s annual income
NEW DELHI: The interim budget 2019-20 announced annual income support of ~6,000 to all farmer families with land ownership up to two hectares under the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN). The announcement triggered a war of words between the Opposition and the government.
“Dear Nomo, 5 years of your incompetence and arrogance has destroyed the lives of our farmers. Giving them Rs. 17 a day is an insult to everything they stand and work for.” Congress president Rahul Gandhi said in a tweet, hours after the scheme was announced. Speaking in Leh on February 3, Prime Minister Narendra Modi attacked the Opposition by saying, “PM-KISAN is a phenomenal scheme for farmers. People sitting in air conditioned rooms in Delhi do not know what ~6,000 mean for a poor farmer living in distant and difficult areas of the country.”
What both Gandhi and Modi did not tell us was how much an average Indian farmer earns. In an interview to the Business Standard newspaper published on Monday, chief economic advisor Krishnamurthy Subramanian said “~6000 announced in the scheme is actually one-sixth, or 16.66% ,of their [small and medium farmers’] annual income” and hence “it is not a trivial amount”. Subramanian did not cite a source for these statistics.
So how much does the Indian farmer earn? And is ₹6,000 substantial? An HT analysis shows that an average Indian farmer would be earning ₹10,329 per month in 2018-19. This means an annual payout of ₹6,000 would be less than 5% of the annual income of ₹1,23,948 that the average Indian farmer currently earns.
An HT analysis of the National Sample Survey Office (NSSO) data suggests that the average farmer income could be much higher than the figure quoted by Subramanian. In 2016, NSSO published a report which gives annual income of farmers in India between July 2012 and June 2013. According to the report, an average agricultural household earned ~6,426 per month, or ~77,112 per year, in India. As is to be expected, there were significant differences in this amount according to land-ownership. Farmers owning between 0.01-0.4 hectare of land reported income of ~4,152 per month, while those owning 10 hectares or more had an income of ~41,388 per month.
If one were to take the weighted average of income of all farmers owning up to 2 hectares of land (beneficiaries of PM-KISAN), it comes out to ~5,240 per month. The NSSO report also tells us that the target group under PM-KISAN accounts for 87% of the total number of agricultural households in the country. Does this mean that handouts under PM-KISAN would give income equal to more than a month’s earnings to 87% of India’s farmers? If this is true, it is not an insignificant move. Still, simply using the NSSO figures could overestimate the PM-KISAN’S impact on farmers’ incomes. This is because the 2012-13 incomes would have increased by 2018-19, the first year when farmers are supposed to get the PM-KISAN payments.