Modi Govt’s New Year gift to farmers: How transformative are these measures?

The Union Cabinet chaired by Modi had just approved a series of measures for the agriculture sector. The continuation of the Pradhan Mantri Fasal Bima Yojana (PMFBY) and Restructured Weather Based Crop Insurance Scheme (RWBCIS) till 2025-26 to provide risk coverage of crops from non-preventable natural calamities for farmers across the country was approved; the special subsidy on Di-Ammonium Phosphate (DAP) beyond what is offered under the nutrient-based subsidy (NBS) scheme to ensure sustainable availability of DAP at affordable prices to the farmers got extended. In addition, the Union Cabinet also approved the creation of a Fund for Innovation and Technology (FIAT) with a corpus of ₹824.77 Crore for large-scale technology infusion in the agricultural sector.

In a separate statement later during the day, Shivraj Singh Chouhan, Union Minister of Agriculture & Farmers Welfare, and Rural Development said the government has set a monthly target for implementing all the schemes being run under the Rural Development Ministry on time to create poverty-free villages in the country. For January, his ministry is set to approve the construction of 10 lakh pending houses against the target allocated earlier in the year 2024-25.

The Modi government has started off the New Year with a lot of goodwill gestures to Indian farmers and rural households. How transformative are these measures?

The easiest to assess is the impact of the extension of existing schemes. The coverage of farmers under PMFBY has been consistently on the rise during the major crop season, the Kharif season, from 16.87 million farmers in 2020 to 25.94 million in 2024. The PMFBY applications for the Kharif season increased from 40.96 million in 2020 to 97.1 million in 2024. The area insured under PMFBY during Kharif increased from 27.2 million hectares in 2020 to 33.3 million hectares in 2024. The acceptance of RWBCIS was also similar. The number of applications under this crop insurance scheme went up from 0.3 million in 2020 to 1.65 in 2024. The area under coverage increased from 0.2 million hectares in 2020 to 0.9 million in 2024. On the face of it, the continuation of the schemes looks good.

The second decision, the extension of additional DAP subsidy, is meant to cushion the cost of this fertiliser to the farmer. Since 2010, the NBS scheme has been operational. At the moment, 28 grades of P&K fertilisers are made available to farmers at subsidised prices through fertiliser manufacturers/importers under this scheme. In July 2024, the government approved a one-time special package on DAP beyond the NBS subsidy @ ₹3,500 per MT from 01.04.2024 to 31.12.2024 with an approximate financial implication of ₹2,625 crore.

On January 1, the Cabinet extended this DAP package with approximate financial implications up to ₹3,850 crore. While the move will help farmers access DAP at a reduced price through this measure, not all farmer bodies consider this as a great measure. In fact, in a statement on January 2, All India Kisan Sabha (AIKS) said the surge in fertiliser price was primarily due to import dependency, monopolistic practices of global suppliers and depreciation of the Indian rupee – all matters that need to be tackled by the government.

“AIKS views the cabinet decision to extend special subsidy on di-ammonium phosphate DAP as facilitating corporate profit rather than protecting farmers’ interests. The fertiliser subsidy has been slashed substantially in the last three years to the tune of an accumulated sum of ₹87,339 crore. In the Union Budget 2022-23 (actuals) the fertiliser subsidy was ₹2,51,339 crore and in the Budget 2023-24 (Revised) the expenditure made was only ₹1,88,894 crore which was less by ₹62,445 crore. As per the 2024-25 Budget estimate, the fertiliser subsidy is ₹1,64,000 crore means further less by ₹24,894 crore,” Vijoo Krishnan, general secretary, AIKS said.

The third farmer-centric Cabinet decision, however, holds some promise as it is meant to fund the implementation of schemes that lead to increased transparency and claim calculation and settlement of crop insurance and improved weather forecasting at a hyper-local level. The first one, the Yield Estimation System using Technology (YES-TECH) uses remote sensing technology for yield estimation with a minimum 30% weightage to technology-based yield estimates. Nine States AP, Assam, Haryana, Uttar Pradesh, MP, Maharashtra, Odisha, Tamil Nadu & Karnataka are already implementing it. The plan is to on-board other states too. ”With the wider implementation of YES-TECH, crop-cutting experiments and related issues will be gradually phased out. Under YES-TECH claim calculation and settlement has been done for 2023-24."

The funds will also be used to promote Weather Information and Network Data Systems (WINDS), which envisages setting up Automatic Weather Stations (AWS) at the block level and Automatic Rain Gauges (ARGs) at the panchayat level. According to an official statement, under WINDS, a five times increase in current network density is envisaged to develop hyper-local weather data in India. WINDS was expected to be implemented by States during 2023-24.

Agriculture & Rural Development Minister Chouhan’s statement was also more about the implementation of the targets fixed for the current financial year in a time-bound manner. Chauhan said that the target for the work of the Rural Development Ministry for the next month has been fixed and in future, targets will be set every month for the work of the ministry and efforts will continue to achieve those targets. On the targets fixed under Pradhan Mantri Awas Yojana Gramin, the minister said the target is to build 2 crore additional houses for the financial year 2024-29. “In January 2025, emphasis will be laid on sanctioning the pending 10 lakh houses against the target allocated earlier in the year 2024-25 and the first instalment will also be released to the beneficiaries,” the minister had pointed out.

Extension of existing schemes, fixing deadlines for timely implementation of existing welfare projects and a renewed pledge to use technology to improve the efficiency of services – that’s what the farmers got this New Year.