Agriculture Investment Support Scheme (Rythu Bandhu), Andhra Pradesh, India
The “Agriculture Investment Support Scheme” (Rythu Bandhu), the first cash transfer scheme for farmers, was introduced by the Telangana State government in 2018-19. Rythu Bandhu literally means ‘Friend of Farmer’. The objective this scheme is two-fold: first, to provide a timely cash grant for initial investment needs of farmers, and second, to ensure that farmers do not fall into the debt trap. The scheme provides a grant of Rs. 5,000 per acre per farmer each season for purchase of inputs such as seeds, fertilizers, pesticides, labour and other investments. The focus of the scheme has been to provide support to small-scale food producers. The total budget of the scheme in 2018-19 was Rs. 120 billion.
The scheme has two primary objectives: first, to facilitate greater investment and use of modern inputs in agriculture, and secondly, to reduce their dependence on credit from informal sources. The scheme is this aimed directly at increasing productivity, improving incomes and relieving debt burden of the farmers. The average land holding in Telangana state is only about 1.12 hectares and the share of households with less than one hectare is 62 per cent and those with between one and two hectares is 24 per cent. Thus, the scheme is expected to directly contribute to achieving SDG Target 2.3 (doubling productivity and incomes of small-scale food producers). For better targeting of the scheme, the land titles have been updated and verified, and beneficiaries are provided updated documents for the land titles. A land bank website, Dharani, has been created to eventually have all land records of the state.
Rythu Bandhu Scheme is designed to provide timely investment support to farmers, particularly small landholders, at the time of sowing. Small farmers do not have adequate access to institutional credit at interest rates regulated by the banking system. They are forced to rely on usurious credit from informal moneylenders. Further there are often delays in disbursement of credit which adversely affects agricultural productivity and income of farmers. Timely cash availability also ensures timely sowing of the crops and purchase of necessary inputs for agricultural crops and hence to optimal productivity. Adequate liquidity also helps in the irrigation in case of the failure of rainfall. All this leads to higher levels yield per unit of land. Thus, it could play a vital role in achieving target 2.3 of Goal 2 of the 2030 agenda emphasizing doubling the agricultural productivity and incomes of small-scale food producers.
Efficient service delivery and effective monitoring were the most important challenges faced by the State Government when it launched Rythu Bandhu scheme. The eligibility criteria were kept simple to ensure that farmers received the benefits within the expected time frame and did not have to incur any additional expenses to avail these benefits. The scheme is open to all resident farmers of the state who owned land. Farmers cultivating the land in the forest, a majority of them from Scheduled Tribe communities, and having Record of Forest Rights (ROFR) document are also eligible to receive benefits under the scheme. A land record upgradation programme (LRUP) that reconciled different sources of information on land ownership preceded the implementation of the Rythu Bandhu scheme. The first distribution of benefits under the scheme was made before sowing for the 2018 Kharif crop. To begin, beneficiaries were given cheques that could be exchanged for cash at a local bank, regardless of whether a person had a bank account or not. The cheques were distributed in village-level meetings organised under the supervision of a State Government Agriculture Officer. The disbursement is done at the beginning of the agricultural season. The dates for the disbursement are announced in advance and since 2020, all transfers are done directly into the bank account of the beneficiary households. The amount disbursed varies according to the season. In the first year of its implementation summer crop of 2018, a total of Rs 52.36 billion were disbursed to about 5.02 million land holders. In the next season (winter 2018-19), similarly about Rs 52.52 billion were disbursed to about 4.9 million land holders. The disbursement during Summer 2019 was Rs 61.7 billion while that in winter 2019-20 was 49.8. billion. In 2020-21, a total of Rs 14.64 billion were disbursed — Rs 72.9 billion to 5.8 million farmers in Kharif season and Rs 73.5 billion to 5.9 million farmers in Rabi season. The Agriculture Department of the State Government is the nodal agency and Agriculture Officers posted at Sub- District level are the nodal officers at the implementation level. Banking institutions are important stake holders and are proactively involved at the Sub-District level and village level for disbursal of cash benefits. The participating Banks in this scheme are public sector banks, private banks and co-operative banks.
A study undertaken by the Tata Institute of Social Sciences based on a survey of beneficiaries in 2019 has revealed that around 78 per cent of landowning farmers got the complete cash transfer for both seasons. The remaining 22 per cent did not receive the cash transfer or received it for a lesser extent in one or both the seasons. Most of these farmers were smallholder food producers. In most of the cases, the main reason for not getting the cash transfer was that the farmers did not have the new Pattadar Passbook (the new Land Title documents) for all or part of their land. The Land Title Passbook, which are provided after verification of land ownership status, is a prerequisite for receiving cash transfers under Rythu Bandhu. Thus, any delay or limitation in the provision of the Pattadar Passbook directly affects the successful implementation of the cash transfer scheme. To overcome this problem, the State Government has committed to complete LRUP on a war footing. The scheme has deployed an innovative technique of phone-based monitoring for monitoring the progress of the Scheme. Bank records of encashment of Rythu Bandhu cheques show that phone-based monitoring improved delivery of financial support. Besides, studies have found that phone-based monitoring benefited the small farmers the most. For the monitoring purpose, a special dashboard software is being developed by the National Informatics Centre (NIC). Beneficiaries are provided the provision of checking the payment status under the scheme on a weblink especially designed for this purpose. One of the major criticisms of the Rythu Bandhu is its exclusion of tenant farmers. A recent study showed that 75% of the farmers who committed suicide in Telangana were farmers who leased land from others. Telangana Social Development Report states that tenancy in the State is on the rise - the leased area constitutes about 14.8% of the total operational area in the State. Tenants are the most excluded section of farmers in terms of access to institutional credit, Minimum Support Price, Warehousing, subsidies and other benefits.
A significant finding of the survey conducted by the Tata Institute of Social Sciences was that the timing of the disbursal of funds was crucial to the success of the Rythu Bandhu Scheme. The survey indicated that if the timing of the disbursal of funds indeed took place right at the beginning of the sowing season, there was a high probability that the cash transfer would get utilised for sowing and other initial cultivation related activities and for purchase of inputs. Based on the findings of the study, it can be stated that cash transfers under the scheme proved beneficial for smaller farmers in terms of acting as a safety net for them. The study found that due to delays and other constraints, about 32 % and 68% of the farmers were unable to utilise the funds for agriculture in Kharif season (summer season) and Rabi season (winter season) respectively. Moreover, only 41% of the farmers reported that the cash transfer amount of Rs. 5,000 ($59) per acre per season was sufficient. Thus, timely disbursement of the benefits is a key factor for success of the scheme.
The scheme directly benefits between 5.8 and 6 million landowning households depending on the season. In 2020-21, a total of Rs 14.64 billion were disbursed under the scheme despite the lower revenues due to the COVID pandemic related disruptions in the economy. This is about 7 per cent of the revenue expenditure of the State budget and only about 0.68 per cent of the state domestic product making it sustainable. Rich farmers are provided with an option to opt out of the scheme and this is expected to reduce the fiscal burden to some extent. Rythu Bandhu Scheme is a long- term financial intervention undertaken by the State Government with a clear-cut regular provision of funds under its annual budget. The government has also taken all necessary steps to engage banking institutions proactively under this scheme. The attractiveness of the scheme is not only the support to small and marginal farmers, it also plays an important role in systematic maintenance and digitisation of the land records. The replicability of the scheme is clear from the fact that in less than a year of the scheme's launch (May 2018), other states of the Union of India-namely Odisha, West Bengal, Andhra Pradesh started supporting farmers through cash transfers. Besides, the scheme inspired the flagship PM-KISAN (Pradhan Mantri Kisan Samman Nidhi) at the national level. PM-KISAN was formally launched on 24th February 2019 providing income support to all small and marginal farmers families across the country. It was expanded in 2019 to make all farmer families in the country eligible for coverage irrespective of the size of their landholdings, and currently aims to cover 125 million farmers.
COVID-19 has impacted every sphere of life in Telangana state including the farmers. The lockdown led to disruptions not only in access to inputs, many farmers faced disruptions in access to markets to sell their produce. Farmers growing vegetables and other perishable commodities were the most affected. During the COVID 19 times farmers were in actual need of cash in hand. The Rythu Bandhu scheme continued uninterruptedly during the peak COVID period including the lockdown and cash transfers to farmers continued. Though the total disbursement under the scheme during the first few months of the COVID pandemic was lower than the previous season, it nevertheless provided a big relief and helped a large number of farmers overcome challenges posed by the pandemic.
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The practice is implemented all across the Telangana State which inspire other States of India including central Government to launch similar kind of project