Context:

• Most economists advocate converting all agricultural subsidies into direct income assistance to farmers in the form of per-acre or per-farmer direct benefit transfers (DBT).

Agricultural/farm subsidies in India:

• These subsidies on inputs (fertiliser, power, water at below cost) or outputs (procuring crops at above market prices) is a government incentive paid to farmers (agribusinesses, agricultural organisations) to
• Supplement their income,
• Manage the supply of agricultural commodities, and
• Influence the cost and supply of such commodities.
• Farm subsidies form about 2% of India’s GDP and the total subsidy to farmers form about 21% of their farm income.

Direct Benefit Transfer (DBT):

• In 2013, the Government of India, introduced the DBT scheme to transfer subsidy benefits from various Indian welfare schemes directly into the beneficiaries’ bank accounts.
• It was introduced with the objectives –
• To streamline the transfer of government-provided subsidies in India.
• To improve the delivery system and redesign the existing procedures in welfare schemes.

Benefits of DBT subsuming farm subsidies:

• Transparent and simple to administer.
• It is crop-neutral. For example, only rice, wheat and sugarcane farmers effectively get minimum support prices (MSPs) now.
• Does not cause distortions in input/output markets.

Some of the current Agri-DBT schemes in India:

• The Centre’s Pradhan Mantri Kisan Samman Nidhi (PM-Kisan) – an annual income support of Rs 6,000 to all landholding farmer families in India.
• The Telangana government’s Rythu Bandhu – extends financial assistance of Rs 10,000 per acre, again to all farmers owning land and without any size limit.
• Andhra Pradesh’s YSR Rythu Bharosa – farmer families are paid Rs 13,500 per year, which includes Rs 6,000 through PM-Kisan and the AP government’s top-up of Rs 7,500.

Limitations of the present Agri-DBT schemes:

• The exclusion of tenant farmers – who undertake cultivation on leased land.
• According to the National Statistical Office’s (NSO) 2018-19 assessment, 3% out of the total estimated 101.98 million operational holdings in rural India were on leased lands.
• Tenant farmers are on the rise, according to NSO surveys, and current estimates may be understated because farm tenancy arrangements are mostly oral, unwritten contracts.
• The incidence of non-owners cultivating agricultural lands is the highest for Andhra Pradesh (42.4%) and Odisha (39%).
• In terms of direct income support to farmers, both AP and Telangana have been trendsetters. However, neither has been able to solve the tenant issue.

Significance of leasing Agri-land in India:

• Agriculture in India is increasingly seeing both “tenancy” (landless/marginal farmers leasing land to cultivate) and “reverse tenancy” (small landowners leasing to larger farmers seeking economies of scale).
• Farming may eventually become a specialised enterprise, as not everyone (including landowners), is skilled or desires to cultivate.
• Leasing can assist both tenant and reverse-tenant farmers in operating consolidated holdings while allowing owners to pursue non-agricultural work without fear of losing their properties.

Way ahead:

• Fixing the tenant problem first by expanding the scale and scope of current Agri-DBT schemes.
• After this, subsuming all existing input and output subsidies under them.