NEW DELHI: Chief Economic Advisor KV Subramaniam on Sunday said the Centre’s farm income support scheme, PM-KISAN, will improve creditworthiness of farmers, among other benefits.
The Pradhan Mantri Kisan Samman Nidhi Yojana (PM-KISAN) was announced in the Interim Budget 2019-20, under which, Rs 6,000 will be given in three instalments to 12 crore small and marginal farmers holding cultivable land up to 2 hectares.
Producer support in India is very low compared to other countries and the scheme will help in supplementing that, he said.
“Across countries, producer support for farmers is quite high. A recent OECD study which talks about producers support in India, says it is quite low. This section is the one which will be feeding 125 crore mouths and you have a population which is growing at less than 1 per cent and food production is growing at greater than 3 per cent,” he said.
Therefore, Subramanian said, there will be surpluses leading to a fall in prices impacting the incomes of farmers. Moreover, he said, the reason farming is supported in a lot of countries is that the risk-return trade-off is bad in the sector.
“Therefore, this constituent required support. There is definitely a case for supporting in a way that does not create distortion,” he said.
The other important benefit of this scheme is in terms of making farmers credit worthy as financial institutions have assured cash flow for this vulnerable section, he said.
The average income of farmers in 2015-16 was about Rs 30,000 and, hence, Rs 6,000 would be 20 per cent, Subramanian said.