Overview of Recent State Announcements
Several state governments have announced additional incentives for farmers, complementing the Centre’s PM-KISAN disbursement. These incentives include:
- Topping up PM-KISAN funds with additional state allocations.
- Providing per-hectare cultivation benefits.
- Offering bonuses over the Minimum Support Price (MSP).
While these measures aim to support farmers, they also increase the financial burden on state exchequers.
Key State-Level Initiatives
| State | Additional Support for Farmers |
|---|---|
| Madhya Pradesh | ₹ 4,000 per hectare for paddy growers (₹ 480 crore burden); ₹ 125 per quintal bonus for wheat (₹ 2,600 per quintal total price). |
| Rajasthan | PM-KISAN top-up to ₹ 9,000 per annum; ₹ 150 per quintal wheat bonus. |
| Chhattisgarh | Krishak Unnati Yojana (₹ 10,000 crore) includes ₹ 19,257 per acre subsidy and paddy purchase bonus. |
| Odisha | CM-KISAN scheme (₹ 2,020 crore allocation); ₹ 10,000 per annum (₹ 4,000 under CM-KISAN + ₹ 6,000 under PM-KISAN); ₹ 12,500 livelihood support for landless farmers. Paddy procurement at ₹ 3,100 per quintal (vs. ₹ 2,300 MSP). |
Challenges and Concerns
- Increased Fiscal Burden: States must allocate additional resources, straining budgets.
- Limited Crop Diversification: Most incentives focus on wheat and paddy, discouraging a shift to pulses, oilseeds, and horticulture.
- Storage & Procurement Issues: High MSP-based procurement leads to surplus stocks and logistical challenges.
Alternative Approaches for Supporting Farmers
Economists have debated three key policy mechanisms:
- Enhancing MSP-based procurement – Ensuring direct government purchases at MSP.
- Direct Benefit Transfers (DBT) – Providing fixed financial support to farmers via PM-KISAN.
- Deficiency Price Payment (DPP) – Compensating farmers when market prices fall below MSP.
A study by C.S.C. Sekhar at Delhi University estimated that a combination of MSP procurement and DPP would cost the government ₹ 2.65 lakh crore to ₹ 3.4 lakh crore annually (based on 2019-20 prices).
Direct Benefit Transfers (DBT) as a Sustainable Alternative
- The study suggests an annual per-hectare payment of ₹ 19,875–₹ 25,980, ensuring direct farmer income support.
- Current PM-KISAN disbursement (₹ 6,000 per year) is much lower than this estimate.
- If the Centre covers ₹ 10,000–₹ 12,500 per farm, the cost would be ₹ 1.44–₹ 1.89 lakh crore per year—cheaper than MSP-based procurement.
Trade-offs & Policy Recommendations
- MSP-based procurement is essential for wheat and paddy, ensuring food security.
- For other crops (pulses, oilseeds, etc.), direct income transfers (DBT) may be a better alternative.
- Tenant farmers are left out of DBT schemes since payments are linked to land ownership.
- A hybrid model (MSP for key crops + DBT for others) may be the best solution.
While state governments are increasing direct transfers and MSP bonuses, the long-term fiscal sustainability of these incentives is in question. A balanced approach—with a mix of targeted procurement and direct income support—could help secure farmer incomes while minimizing budgetary strain.
