How Farm Loan Waiver Data Helped Modi Roll Out PM Kisan In Eight Days

Farmers in Uttar Pradesh have so far been the biggest beneficiaries of PM Kisan.

A farmer holds a millet plant for a photograph in a field on the outskirts of Bengaluru, India. (Photographer: Dhiraj Singh/Bloomberg)
A farmer holds a millet plant for a photograph in a field on the outskirts of Bengaluru, India. (Photographer: Dhiraj Singh/Bloomberg)

Nothing gets a government scheme faster off the ground than an election. It took eight days for one crore farmers to be identified as beneficiaries of the Modi government’s PM Kisan Scheme, and for a total Rs 2,000 crore to be paid out to them.

This data and logistical achievement was helped in part by states that already had detailed land records on hand, and a multi-step verification system involving the Public Financial Management System and banks. Farmers in Uttar Pradesh have so far been the biggest beneficiaries of PM Kisan. But even as the second instalment will be rolled out to the now 2.7 crore identified farmers in April, many others across the country have yet to receive their first.

The Pradhan Mantri Kisan Samman Nidhi or PM Kisan scheme, a first-of-its-kind farmer income support scheme in India, was announced in the union budget on Feb. 1, just months before the country goes to polls. Under PM Kisan, the outgoing Modi government promised to pay three instalments of Rs 2,000 each to 12 crore small and marginal farmers owning land up to two hectares. That amounted to a total cost of approximately Rs 75,000 crore. Given the hustings pressure, the scheme was made effective retroactively, from Dec. 1, 2018, implying that the first instalment would be paid before the end of March. Hence the government allocated Rs 20,000 crore for the programme in the current financial year. And another Rs 75,000 crore in FY20.

The biggest challenge facing the scheme is accurately identifying the beneficiaries. Based on the guidelines shared by the central government, states were asked to identify eligible farmers via existing land records and by conducting surveys, said Vivek Aggarwal, chief executive officer of PM-Kisan, to BloombergQuint in an interview.

Starting Feb. 16, states started uploading beneficiaries’ data on the PM-Kisan portal, Aggarwal said. The data was then verified by the central government and in eight days the payments to one crore farmers’ bank accounts began.

The Identification Challenges

For states, the identification process involves:

  • Identifying farmers who own 2 hectares of land or less (via existing records and surveys).
  • As per the central government’s guidelines, states can also use existing data of beneficiaries of the Pradhan Mantri Fasal Bima Yojana and Soil Health Card (available on the PM Kisan portal).
  • States then have to exclude the families whose one or more members filed income tax returns in the last assessment year, are in other professions, hold constitutional posts.
  • Seek self-declarations from farmers.
  • And collect farmers’ bank account numbers, IFSC codes and Aadhaar numbers and other identification details.

This data has to be uploaded on the PM Kisan portal. If found to be complete, the data is then shared for verification with the Public Financial Management System. PFMS is the portal that links financial networks of central and state governments and their agencies. The PFMS verifies the farmer’s bank account number and IFSC code through its database. If any entry fails the verification process, it is sent back to states. Entries approved by PFMS are sent to banks to check if the accounts are active, and the banks return data on valid accounts to the PFMS. Once the PFMS receives the verified data from banks, it’s again sent to states to confirm names since the beneficiary name and account holder’s name may differ. Once the data is matched and verified the money is transferred to the farmer’s bank account via a sponsor bank.

A farmer walks through his dried-up field (Photographer: Prashanth Vishwanathan/Bloomberg)
A farmer walks through his dried-up field (Photographer: Prashanth Vishwanathan/Bloomberg)

Ready States

Farmers in India's largest state Uttar Pradesh are the biggest beneficiaries of PM Kisan so far. Nearly 70 lakh farmers in the state, 25 percent of all beneficiaries, have received the first instalment of Rs 2,000 each, Aggarwal said.

That’s because the state recently implemented a farm loan waiver and had data on about 2 crore direct benefit transfer farm beneficiaries. Therefore, it wasn't difficult for the state government to share data of farmers with the centre, a senior state government official in the agricultural department said on condition of anonymity.

Chhattisgarh was also among the first states off the block, for the same reason. “We had already done the exercise while announcing loan waivers and giving minimum purchase price for farmers, so their accounts had already been identified,” said TS Singh Deo, minister for panchayat and rural development in the state.

Gujarat and Andhra Pradesh are the other states with maximum farmers on the PM-Kisan list. Andhra Pradesh, too, recently implemented a farm loan waiver.

“State governments have to cooperate…because the onus is on states to identify the beneficiaries and upload the data as land record is a state subject,” Aggarwal told BloombergQuint.

Predictably though, the issue of state participation has become less about data readiness and more about party politics. On March 7, Finance Minister Arun Jaitley pointed to states that haven’t yet participated. “Why are some Congress-ruled states and West Bengal not cooperating with PM-Kisan? Why are they letting down their farmers?” Jaitley tweeted.

Jaitley wrote that Karnataka (Congress-JDS government) has shared data on only 60,023 beneficiaries with PM-Kisan, while Madhya Pradesh (also ruled by Congress) has submitted names of just 298 beneficiaries. West Bengal (TMC government) hasn't shared any data, he pointed out.

Rajasthan, Madhya Pradesh and Karnataka are the states that are sharing data at a slow pace, Aggarwal said, adding that many other states were nearing completion of the database. Every state was at a different level of data preparedness, some states had a lot of data, and it was easier for them to upload it, he admitted.

Under PM-Kisan scheme, the entire expenditure is borne by the central government and states have no share, so opposition-ruled states are reluctant to provide list of farmers as they feel that the credit will be taken by central government, said former Agriculture Secretary Hussain.

And though his state has already participated in the scheme, Chhattisgarh’s Deo told BloombergQuint that the income support given to farmers is not enough. It's a Congress-governed state.

“The scheme should have been linked to size of the land holding and the produce, so it’s an incomplete scheme,” he said. It does not cover all farmers, but land owners, he added. “It's giving something to make an impression rather than addressing the issue of the farmers at large.”

Leakage And Other Gaps

Some of the other criticism the scheme faces is around leakage or benefit to those undeserving of it.

Often, the farmer may not need the income support. Vikrant Tongad, a social and environmental activist and a beneficiary of the scheme, told BloombergQuint that he wants to return the amount he has received as he doesn't need it. There should be a provision to surrender the funds, he pointed out.

Since the scheme was launched in a hurry, many undeserving people will get the money, said Hussain. The exclusion criteria prescribed by the centre is not very specific.

“Someone who is earning good income in unorganised sector but not paying income tax is entitled to get money though he should be excluded," Hussain said.

Interestingly, the scheme allows for payment to be made to every farmer even if the land has joint ownership. So multiple farmers attached to the same parcel of land will get Rs 6,000 each.

PM Kisan CEO Aggarwal said there have been no leakages in the system as of now, but about 30-40 percent of beneficiaries’ data has been returned to states due to mismatch in information. In such cases, states correct the data and upload it again on the portal.

But the bigger problem is that PM Kisan does nothing to fix the endemic problems facing Indian agriculture, according to B Dasaratha Rami Reddy, secretary general of Consortium of Indian Farmers Association.

The scheme will not solve the problems farmers are currently facing, and there is need for long-term policy measures in the agriculture sector, Reddy told BloombergQuint over the phone. The farmers need remunerative prices for their crops, investments in the sector, and better marketing facilities, according to Reddy. “This is a knee-jerk policy for political gains.”