Pan-India Rythu Bandhu to cost over Rs 2 lakh crore, says Ramesh Chand

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December 20, 2018 1:27 AM

Pan-India roll-out of a scheme similar to Telangana's crop investment support scheme Rythu Bandhu could cost the exchequer a prohibitive Rs 2.1 lakh crore/annum, Niti Aayog member Ramesh Chand said on Wednesday.

Pan-India Rythu Bandhu to cost over Rs 2 lakh crore, says Ramesh Chand

Pan-India roll-out of a scheme similar to Telangana’s crop investment support scheme Rythu Bandhu could cost the exchequer a prohibitive Rs 2.1 lakh crore/annum, Niti Aayog member Ramesh Chand said on Wednesday.

Even though Rythu Bandhu, which is a top-up scheme (an additional benefit to farmers along with other subsidies given by the state/Centre), is better than farm loan waivers in terms of efficacy as it benefits more people, it won’t be possible to replicate it at the central government level along with other running subsidies on fertiliser, seeds, etc due to the large fiscal cost, he said.

“Such a scheme will hurt other investment programmes of the Centre,” Chand added. The Centre’s capex is estimated to be about `3 lakh crore in FY19.

Rythu Bandhu scheme’s roaring start has borne out its higher efficiency as well as better efficacy compared with farm loan waivers and the promised MSP-based deficiency payments, when it comes to giving succour to the farming community. However, critics say it benefits landlords rather than ‘real cultivators’, as land holding is a prerequisite for availing the cash support.

The Telangana government has set aside `12,000 crore in the 2018-19 budget exclusively for the scheme, under which farmers with land titles are given `8,000/acre a year by two equal pay-order cheques issued ahead of the two crop seasons.

“In poorer states, only 10-15% of farmers benefited from loan waiver as few number of farmers get institutional loans in such states. In many states, not even 25% of farmers avail institutional credit,” Chand noted.

In many states, loans availed by farmers are more than even crop output in a season, he said, referring to use of such loans for other consumption activities by people. Chand said more steps are needed to increase income level of farm labourers.

In FY18 and so far in FY19, seven states have unveiled farm loan waivers amounting to a total of `1.6 lakh crore. More such announcements are expected from states in the coming months ahead of general elections in April-May next year.

On national-level farm loan waivers, Chand said there would be so many conditionalities that it would benefit a minuscule of farmers like UPA’s scheme that was announced in 2008-09.

Niti Aayog vice-chairman Rajiv Kumar said the think tank would suggest to the ministry of agriculture to link allocations to states to reform measures undertaken by them in the farm sector.

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