The agricultural economy has distinct characteristics compared to the usual economic behavior of households. About two decades ago, when I was working in the agricultural sector, the distress, I observed, the demand for cash for the purchase of agricultural inputs and related activities each year. Most of the farmers lacked cash and faced the problem of timely purchasing the necessary resources. Crop loans are available, but if a previous crop loan is due, then it is difficult for the farmer to get a new loan, forcing him to take loans from non-institutional sources. The feeling of going to someone for petty cash for pre-sowing operations causes mental distress and hardship to farmers. This is exactly where the intertwining of the credit market with the product of the labor market takes place and where the poor farmer is the recipient.
This is the precise moment when farmers need financial support; taking into account the cropping calendar, cash requirements arise mainly during the fallow period and at the time of harvest. The crop loan scheme like Kisan Credit Card (KCC) certainly provides credit assistance to the farmer. It has been observed that farmers prefer to withdraw the eligible credit available on KCC all at once rather than visiting the bank more often. Therefore, the most important aspect of the farm household economy is the need for cash at different times during an agricultural season. Besides during pre-sowing, crop growth and intercropping and the harvest season, the farmer also needs money for his household needs.
The Pradhan Mantri Kisan Samman Nidhi Yojana (PM Kisan) program was launched on February 24, 2019 in Gorakhpur, UP by Honorable Prime Minister Narendra Modi. Under this scheme, a financial benefit of Rs. 6000/- per annum is transferred to the bank accounts of farming families across the country, subject to certain exclusion criteria related to higher income status, through Direct Benefit Transfer (DBT) mode. The amount is transferred in three equal installments of Rs 2000/- every four months of each financial year. The program provides income support to land-owning farmers in India, which helps them procure various inputs related to farming and related activities, as well as their household needs. The government tries to reach out and pass on the benefits to all eligible farm families through this program. It is one of the finest examples of good governance.
PM Kisan over this 3.5 year period has successfully provided assistance of over Rs 2 Lac crore (Source: Department of Agriculture and Farmers Welfare). Largest DBT program across the country. Over 1.6 crores are being transferred to eligible farmers since the start of the lockdown in March 2020 due to the COVID pandemic, accounting for over 80% of the total disbursement.
The program has many features such as beneficiary registration process has been simplified and facilitated through a mobile application, PM KISAN portal and walk-in visits through common service centers to give the maximum benefit. benefits to farmers. It also provides grievance redress and support option. Through this initiative, more than 13.5 lakh grievances have been redressed by the concerned state authorities. Tremendous efforts are being made by the government to activate the PM Kisan scheme, which has revolutionized the welfare framework for farmers in India.
Over the years, PM Kisan has increased bank account penetration, adoption of Aadhaar and bank linkages with Aadhaar in rural areas. The impact of the program is well perceived in rural areas. The program has a significant impact on easing liquidity constraints.
India has more than half of its farming households who do not have access to formal credit and also those who have difficulty obtaining formal credit. Although the program is presented as a general cash transfer program for farmers, its role in the adoption of modern technologies remains an important factor in contributing to the modernization of agriculture by enhancing the productive investment of farmers.
Institute for Social and Economic Change