PM-KISAN Scheme: Rural Consumption Implications
The agriculture sector which contributes close to 20% of India’s GDP, relies on the work put in by farmers. Farmers form the majority of the population, but despite their numbers, a majority of these farmers have a hard time making enough to fulfil their basic needs. Furthermore, the income of the farmers is highly uncertain as it is contingent on many factors that are beyond their control, like the conducive weather conditions needed for a good harvest. Global uncertainty also has significant implications on the farmers’ income. A large chunk of the farmer’s remuneration comes from the export of produce. Global turmoil that hinders exports, can really affect what a farmer makes in a year.
In light of these facts, the government of India introduced the PM-KISAN Scheme. This scheme was introduced with the aim of providing financial aid to all the farming families in the country who own cultivable land. Under this scheme, the government will annually disburse an amount of INR 6,000 to the eligible beneficiaries, in increments of INR 2,000, directly into the Adhaar Linked bank account of the farmers. The government has been considering increasing the amount of financial aid provided to the farmers under the PM-KISAN Scheme from INR 6,000 to INR 8,000 annually. Of late, a multitude of factors has given rise to apprehensions about the income of farmers. In an effort to control rising inflation figures, the government implemented measures such as prohibiting the export of specific rice categories. Furthermore, India experienced its lowest monsoon rainfall in five years this season, posing a threat to the crucial crop harvest this year. Keeping in mind the challenges that these events will present for farmers, the government has taken such an amendment into account.
If this change is implemented, it will create an additional cost for the government to the tune of INR 20,000 crores, which is over and above the existing budget of INR 60,000 crore for the policy. Furthermore, this change, if implemented will create a huge boost in rural spending and consumption, which in turn will have positive implications for sectors like FMCG, Two-Wheelers, and Commercial Vehicles.
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