Why DBT schemes need to fix the problem of tenant farmers

Source: The post is based on an article “Why DBT schemes need to fix the problem of tenant farmers” published in The Indian Express on 28th November 2022.

Syllabus: GS 3 – Agriculture

Relevance: problems associated with agri-DBT

News: Many economists argue that all agricultural subsidies should be converted into direct income support to farmers.

It is because DBT is transparent and simple to administer. It is crop-neutral and does not cause distortions in input/output markets. However, there are problems associated with it.

What is the problem associated with agri-DBT?

There is one limitation with the present agri-DBT schemes that they do not reach tenant farmers, i.e., those who undertake cultivation on leased land.

Due to the rise in leasing of lands the tenant farmers are excluded from income support including zero/low-interest loans, crop insurance, disaster compensation and other agri-related schemes.

What does the data highlight?

According to the National Statistical Office’s (NSO) survey for 2018-19, 17.3 percent out of the total estimated 101.98 million farms in rural India were on leased lands.

Andhra Pradesh (42.4 per cent) has the highest tenant farmers followed by Odisha (39 per cent).

Haryana and Punjab have the share of leased-in area higher than the percentage of tenant holdings. It means that the tenant farmers of Haryana and Punjab cultivate large area of land, even though they don’t own these lands.

The NSO surveys highlight that there has been a steady increase in tenant farmers but the agreements between the land owner and tenant farmer are mostly oral and unwritten.

This causes problems with DBT transfers as benefits cannot be availed by the real farmers and it gets transferred to the account of non-cultivating owners.

However, Andhra Pradesh tried to solve the problem of tenant farmers but it also has problems with it.

How has Andhra Pradesh tried to solve the problem?

The AP government agri-DBT scheme also covers tenant farmers. The government in 2019 enacted the AP Crop Cultivator Rights law.

The law provides for the issuance of “Crop Cultivator Rights Cards (CCRC)” to persons cultivating the lands of owners under agreements with 11-month validity countersigned by the concerned village revenue officers.

The cards provide tenant farmers benefits under the state’s DBT schemes along with obtaining crop loans from banks.

However, very few tenant farmers have received the CCRC card and out of those who received the card, very few availed the benefits of loans or DBT.

The problem with CCRC is that it requires landowner’s signature and cannot be issued without his consent but most owners are reluctant to sign.

They fear that this may give rights to tenant farmers over lands and they might face the burden of loan taken by the tenant farmer if they fail the repayment.

What is the way forward?

Agriculture in India is increasingly seeing both “tenancy” (landless/marginal farmers leasing in land to cultivate) and “reverse tenancy” (small landowners leasing out to better-off farmers keen to reap economies of scale).

Therefore, the central government needs to expand the scope of PM-KISAN by subsuming all existing input and output subsidies under it. However, the problems of benefitting tenant farmers may still be a concern.

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