Direct Income Support for Farmers in India: Impact and Lessons

Introduction

Agrarian distress has been a persistent challenge in India, with stagnating farm incomes and rising farmer indebtedness in recent decades. In response, policymakers have increasingly turned to direct income support (DIS) schemes for farmers. Unlike traditional subsidies or loan waivers, these programs provide cash transfers directly to agricultural households, aiming to boost farmers’ incomes and security.

Since 2018, several Indian states – and the central government – have launched DIS schemes for farmers, such as Telangana’s Rythu Bandhu, Odisha’s KALIA, Andhra Pradesh’s YSR Rythu Bharosa, Chhattisgarh’s Rajiv Gandhi Kisan Nyay Yojana, West Bengal’s Krishak Bandhu, and the nationwide PM-KISAN. This article evaluates the background and impact of these schemes on agricultural households, examines what research studies have found, and discusses whether a basic income support framework for farmers can work in India – including how much to pay, how to pay, and to whom.

Emergence of Farmer Income Support Schemes

Traditional support to Indian farmers has often come through subsidized inputs (like fertilizer and power) or output price support (Minimum Support Prices for certain crops). However, these benefits largely accrued to farmers with access to formal markets or larger landholdings, while many smallholders were left out. After 2014 – especially around 2018–2019 – multiple governments pivoted toward direct benefit transfer (DBT) schemes for farmers.

The logic was simple:

• Unconditional cash grants are transparent and crop-neutral.
• They allow farmers to spend on their most pressing needs – inputs, debt repayment, food, health or education.
• They could be an alternative to periodic loan waivers, which provide only temporary relief and often benefit better-off borrowers.

Telangana was the first to introduce a large-scale cash support scheme for farmers in 2018, and several others quickly followed. Below is an overview of major income support schemes for farmers in India (post-2014):

Rythu Bandhu (Telangana, launched 2018)

The pioneering state-wide cash transfer program for farmers. It provides ₹5,000 per acre each cropping season (Kharif and Rabi), totaling ₹10,000 per acre annually. The primary objective is to give cultivators timely money for seeds, fertilizers, and other inputs before sowing, so they don’t fall into a debt trap with moneylenders.

• All land-owning farmers are eligible, with no land size cap, and the scheme has reached about 5–6 million farmers each season.
• By 2023, Telangana had spent over ₹65,000 crore on Rythu Bandhu over 10 crop seasons.

However, tenant farmers (who lease land but do not own it) are excluded – a serious shortcoming given that an estimated 30% of Telangana’s cultivators are tenants. Field studies have found that a very high proportion of farmers who died by suicide in Telangana were tenant farmers with no land title, meaning they received no Rythu Bandhu support.

Pradhan Mantri Kisan Samman Nidhi – PM-KISAN (nationwide, launched 2019)

India’s flagship central farmer income scheme, inspired by the state initiatives. It provides ₹6,000 per year to every landholding farmer family across the country, paid in three installments of ₹2,000.

• Initially limited to small and marginal farmers, it was later expanded to all farmer families, irrespective of land size.
• As of 2025, PM-KISAN has transferred well over ₹3.7 lakh crore directly into the bank accounts of more than 110 million (11 crore) farmer households – a massive injection of income support into rural India.

This scheme too, like Rythu Bandhu, bases eligibility primarily on land ownership, thus leaving out many tenant cultivators in practice.

YSR Rythu Bharosa (Andhra Pradesh, launched 2019)

A state top-up to PM-KISAN, fulfilling an election promise of the Andhra Pradesh government. Under Rythu Bharosa, farmer families receive ₹13,500 per year, which includes the ₹6,000 from PM-KISAN plus ₹7,500 from the state.

• The scheme covers landowners (no size limit, similar to Rythu Bandhu).
• Notably, Andhra Pradesh has made provisions to include tenant farmers via the Crop Cultivator Rights Card (CCRC) system – a reform intended to document leases and extend benefits to tenant cultivators.

However, in practice, the uptake has been very limited. A 2022 survey of 3,855 tenant farmers in AP found only 364 had obtained CCRC cards, and merely 63 of those received Rythu Bharosa payments. Requiring landowner consent for tenancy registration proved a major hurdle, as many landlords resist documenting leases. Thus, despite AP’s progressive intent, the vast majority of actual cultivators without land titles remain left out – highlighting a “tenant exclusion”problem common to most DBT schemes.

KALIA – Krushak Assistance for Livelihood and Income Augmentation (Odisha, launched late 2018)

Odisha’s pioneering scheme took a more inclusive approach. KALIA targeted:

• small and marginal farmers,
• sharecroppers, and
• landless agricultural labourers – groups usually left out of land-based schemes.

Key features:

• It provided ₹25,000 over five seasons (roughly ₹5,000 per season) to each small/marginal farm household for inputs.
• Landless rural households received one-time grants of ₹12,500 for livelihoods (like animal rearing).
• Vulnerable farmer households (such as elderly or disabled) got ₹10,000.

By design, wealthier farmers, government employees and large landowners were excluded through a technology-driven verification process. In its first phase, ₹2,500 crore was disbursed to about 51 lakh (5.1 million) farmers within a few months.

Early evidence suggests KALIA met its goals of inclusivity and credit relief – even tenant farmers and sharecroppers benefited, thanks to Odisha leveraging over 20 databases (land records, socioeconomic census, etc.) to identify cultivators without formal titles. A preliminary World Bank evaluation found KALIA beneficiaries were significantly less likely to take out crop loans, and those who did borrowed smaller amounts than non-beneficiaries, indicating that the cash support helped smooth incomes and reduce debt needs. KALIA’s implementation was widely noted for using technology (Aadhaar, digitized records) to quickly process millions of applications and avoid duplication.

(Notably, after the central PM-KISAN launch, Odisha effectively merged KALIA with PM-KISAN in 2019 due to fiscal constraints, reducing the state’s contribution. But its initial success offers a model for inclusive design.)

Rajiv Gandhi Kisan Nyay Yojana (Chhattisgarh, launched 2020)

A unique income support scheme linked to crop production. RGKNY provides a cash transfer of ₹10,000 per acre per year to farmers, but the calculation is based on crop yield procured by the government.

• The government assumed a yield of 15 quintals per acre as a standard. For every 15 quintals of paddy (or other eligible crop) that a farmer sells to the government procurement system, they receive ₹10,000 – even if the farmer’s own landholding is less.
• In effect, a farmer with higher yields or who farms on leased land can get more than ₹10k per physical acre: for example, someone selling 45 quintals (deemed equivalent to 3 acres of produce) would get ₹30,000.

This innovative design rewards productivity and brings tenant-farmers into the fold (as cash is tied to crop sales, not land title). At launch, Chhattisgarh disbursed the first installment of ₹1,500 crore to about 1.9 million farmers (including many small and marginal growers). The scheme initially focused on paddy, maize and sugarcane, alongside a record state procurement of 92 lakh tonnes of paddy at MSP in 2020.

Surveys indicate RGKNY has helped cover a substantial chunk of input costs and increase farmer incomes, encouraging farmers to produce more. In one field study, 88.8% of farmers reported receiving the payments and were satisfied with timely disbursals. Many farmers said the ₹10k/acre support – combined with assured MSP procurement – improved their ability to repay loans, and about 79.4% of surveyed farmers reported no longer facing serious problems servicing debts. The reduced financial stress coincided with a reported drop in farmer suicides in Chhattisgarh: from 1,344 farmer suicides in 2.5 years (pre-2018) down to 431 in the three years post-2018 after RGKNY and other measures were in place. While multiple factors may be at play, the state government credits the “input assistance + MSP” combination under RGKNY as a key factor in this “silent revolution” in Chhattisgarh’s rural economy.

Krishak Bandhu (West Bengal, launched 2019)

West Bengal’s farmer support scheme offers an assured income to farmers along with a life insurance benefit.

• Initially set at ₹5,000 per acre per year, it was later doubled – now farmers receive up to ₹10,000 per year in two installments (₹5,000 for Kharif and ₹5,000 for Rabi).
• Even farmers with very small holdings benefit: those with less than 1 acre get a flat ₹4,000 per year minimum.

A notable feature is the inclusion of recorded sharecroppers (bargadars) as eligible beneficiaries. West Bengal has a long history of sharecroppers’ rights, and under Krishak Bandhu, registered tenant-farmers can also receive the cash grant – a rare instance of explicitly covering non-landowners. The scheme has broad coverage; as of 2024 it was reportedly reaching over 9 million (90 lakh) farmers in the state.

Additionally, it provides a ₹2 lakh death benefit: if a registered farmer (18–60 years old) dies, the family gets ₹2 lakh as insurance support. This social security component is unique among the state schemes. Krishak Bandhu’s design – with a modest per-acre grant and tenant inclusion – aims to balance widespread reach with equity.

(Other states have implemented similar measures on a smaller scale. For instance, Jharkhand introduced the Mukhyamantri Krishi Ashirwad Yojana in 2019, which provided ₹5,000 per acre (up to 5 acres) to farmers. Many of these state initiatives were eventually dovetailed with or overtaken by the central PM-KISAN after 2019, but they set important precedents.)

Impacts on Agricultural Households: What the Evidence Says

Direct income support schemes for farmers are still relatively new, but early studies and evaluations have shed light on their effects and limitations. Overall, DIS programs have provided a safety net and liquidity boost for many farming families, yet their ultimate impact on agriculture depends on implementation details (timing, targeting) and complementary policies.

Boost to Farmers’ Liquidity and Input Use

When payments are made on time (ideally at the start of the cropping season), farmers are able to spend the money on seeds, fertilizer, and other inputs – potentially improving productivity. In Telangana, surveys found that when funds were disbursed right before sowing, a high proportion of farmers used the Rythu Bandhu grant for agricultural purposes. The Telangana government also emphasizes that Rythu Bandhu has promoted “investment security” – farmers have cash in hand to cover initial costs, which can reduce their need to borrow at high interest.

However, timing is critical. The same Telangana study concluded that when funds arrived late (after the first few weeks of cultivation), the likelihood of the cash being used for farm investments dropped sharply. In fact, delay in Rabi season payments led most farmers to divert the money to non-farm needs, since the window for input purchase had passed. The lesson is clear: to meet the goal of spurring agriculture, income support must “beat the planting clock.”

Consumption Smoothing and Debt Reduction

Unconditional cash transfers give farm households flexibility to address urgent needs – whether farm-related or household consumption. Studies indicate this has had a positive smoothing effect on incomes.

• In Odisha, for example, KALIA support enabled families to reduce their reliance on loans for cultivation. Evaluations found KALIA recipients were significantly less likely to take crop loans, or took smaller loans, compared to non-recipients.
• In Chhattisgarh, survey data after RGKNY’s rollout showed about 79% of farmers had no difficulty repaying debts, with many attributing it to the supplementary income from the scheme. A number of farmers used part of the cash to clear existing loans – in one survey, about 21.5% of Chhattisgarh farmers said they utilized the support money specifically to pay down debt.
• Even in Telangana, which saw many farmers spend the Rabi-season cash on household needs, that spending served a welfare role – covering expenses like family necessities, health, or education in the absence of other income.

By cushioning consumption and lowering dependence on moneylenders, the direct payments may indirectly contribute to farmer well-being (and possibly help mental health – as suggested by declines in distress indicators in some states after income support schemes were introduced).

Inclusion vs. Exclusion

A major critique of early income support schemes is which farmers they don’t reach. Since most programs (barring Odisha’s KALIA and West Bengal’s Krishak Bandhu) use land ownership as the basis, tenant farmers, share-croppers, and landless laborers are often excluded.

• Nationally, about 17% of farm holdings and 13% of cultivated area are worked by tenant farmers (2018–19 data), and these proportions have been rising.
• In states like Andhra Pradesh and Odisha, over 40% of farmers lease land.

If income support only goes to owners, the real tillers receive no aid and continue to rely on informal credit. Telangana’s Rythu Bandhu, for example, left a sizeable number of actual cultivators unsupported – independent surveys indicate tenancy in Telangana could be around 30% of farmers, roughly double the official estimates. Andhra Pradesh’s attempt to include tenants via registries shows how challenging it is to close this gap: requiring landowner sign-offs meant the vast majority of tenants never got the required ID cards.

Some states are trying creative solutions:

• Chhattisgarh tying payments to produce deliveries,
• Odisha using community databases and multi-source verification to identify sharecroppers,
• West Bengal leveraging its long history of recording bargadars.

But the tenant exclusion remains a structural problem in many current schemes. It points to the need for broader tenancy reforms or alternate identification methods if income support is to truly cover “all cultivators”. On a positive note, West Bengal’s inclusion of registered share-croppers in Krishak Bandhu stands out as a good practice, though it hinges on having those share-croppers legally documented.

Equity and Distribution of Benefits

Who gains more from these schemes – small farmers or big landowners? This has been a contentious point.

• A flat per-household grant (like PM-KISAN’s ₹6,000) is relatively pro-poor, because it is a far higher share of income for a small farmer than for a large one.
• A per-acre grant (like Rythu Bandhu) tends to give more cash to those with more land.

Telangana’s Rythu Bandhu deliberately had no upper limit, in the interest of simplicity and universality, but the outcome is regressive allocation: large landholders receive hefty payouts while marginal farmers get little. One analysis estimated that under Rythu Bandhu (₹10,000/acre/year), the transfer amounted to only about 16% of an average marginal farmer’s annual income, but for a “large” farmer (25 acres), it equaled roughly 174% of that farmer’s annual income. In other words, a big landlord could collect far more than what their typical farm earnings would be, essentially earning a surplus, whereas a marginal farmer only gets a small supplement.

This reflects underlying land inequality: 1 or 2 acres of land yields a modest livelihood, so ₹10k helps but won’t transform the situation, while 20+ acres (often owned by wealthier families) can yield a substantial windfall from the treasury.

The Common Agricultural Policy (CAP) in the European Union faces a similar critique – there, direct income payments are largely proportional to farm size, and about 20% of the largest farmers receive a disproportionate share of subsidy money. Analysts have dubbed it “welfare for the rich” as large agribusinesses capture the lion’s share of payments intended to support farmers. India’s state schemes risk replicating this pattern if not designed carefully.

Encouragingly, some programs did build in progressive elements:

• Odisha’s KALIA outright excluded large landholders and focused on the vulnerable.
• West Bengal capped the benefit at ₹10,000 even for multi-acre owners while ensuring a minimum for the smallest farmers.

Going forward, better targeting, caps or means tests could improve the equity of income support distribution.

Agricultural Outcomes

It is still early to judge long-term productivity impacts of these cash transfers. The core intent – boosting crop output by easing credit constraints – has seen mixed results so far.

• Some evidence suggests increased investment by farmers who received support, but mostly among those with actual unmet needs for inputs. In Telangana, a field study found about 68% of farmers who got the cash in Kharif (monsoon) did spend at least part of it on agricultural expenses. These were likely farmers who had inputs to buy or labor to hire and could utilize the money as intended.
• However, in the Rabi season, the vast majority (around 76%) of farmers surveyed did not cultivate a second crop (Telangana has a large single-crop area), and so they used the Rythu Bandhu money for other purposes (household expenses, marriages, etc.). That didn’t increase production, though it did help those families financially.

In Chhattisgarh’s case, by linking the cash to crop sales, the design encourages farmers to bring more produce to the market (and possibly intensify cultivation). The state did register a boost in paddy procurement and a modest rise in yields after RGKNY’s introduction, but it’s hard to attribute causality directly.

Overall, no significant leap in productivity has yet been recorded solely due to these schemes. They function more as an income enhancer and risk reducer than as a primary productivity driver. Economists caution that without complementary measures – irrigation, better seeds, training, market linkages – a cash transfer by itself is unlikely to transform agriculture’s growth trajectory. The money often ends up plugging gaps in the household budget rather than turning into fresh farm investment, especially for the poorest farmers. In that sense, these programs resemble a basic income support or welfare measure for farm families, improving their livelihood and resilience, if not dramatically increasing output in the short run.

In summary, direct income support schemes have indeed provided tangible relief to crores of farm households. They have injected much-needed cash into rural economies, helped farmers meet expenses on time, and prevented some from falling into crippling debt. At the same time, challenges like excluding tenant farmers, benefits accruing more to large landowners, and the need for timely implementation have become apparent. Farmers themselves have welcomed the assistance – in surveys, a majority say they wish these schemes to continue even over other supports like higher MSP, because many small cultivators don’t effectively get MSP anyway. For them, a guaranteed cash transfer acts as a dependable safety net in an uncertain farm business.

Beyond Politics: How Should the Quantum of Support Be Determined?

A crucial but under-discussed dimension of these schemes is the amount they pay. Why ₹5,000 per acre per season in Rythu Bandhu? Why ₹6,000 per year per household in PM-KISAN? These amounts are politically salient, but from a design perspective they are essentially arbitrary.

Political Numbers, Not Economic Numbers

Both Rythu Bandhu and PM-KISAN were shaped by:

• Perceptions of what sounds “meaningful” to farmers;
• The overall fiscal envelope governments thought they could afford;
• The need for simple, rounded figures.

Neither was clearly derived from:

• Cost of cultivation (CoC) calculations;
• Estimates of income shortfalls;
• Agricultural inflation;
• Or any explicit safety net benchmark (for example, a minimum share of monthly household consumption).

This creates three problems:

1. Erosion over time: If prices and wages rise but the transfer remains flat, its real value slowly declines.
2. Mismatch with actual costs: For some crops/regions, the amount is too small to matter; for others, it may be more than needed relative to costs.
3. Opaque and politicised revisions: Adjusting the quantum becomes a matter of political bargaining rather than formula-based updating.

Linking Support to Objective Indices

If these schemes are serious about cultivation incentives and income protection, the quantum should be set and revised through transparent criteria, for example:

1. Cost of Cultivation–linked formula
2. Agricultural inflation index
3. Caps and floors
4. Cultivator-only eligibility

A framework of this sort would transform direct income support from a one-time populist announcement into a rule-based, predictable entitlement.

Per-Acre vs Per-Household Models: What Are We Designing For?

Another design choice with big implications is whether transfers are per acre or per household.

Per-Acre: Investment Support, but Regressive

Rythu Bandhu, RGKNY (in practice), and Krishak Bandhu are primarily acreage-based. This has certain logic: input costs rise with area; more land means more seeds, fertiliser, labour.

However:

• The distribution of land in India is very skewed. A small minority of large farmers control a large share of land.
• Per-acre transfers thus automatically favour larger landowners. The more land you own, the more you get.
• Tenants get left out if eligibility is tied to ownership, not cultivation.

Functionally, per-acre support behaves like a modern input subsidy:

It supports the farm as a production unit, not the household as a unit of welfare.

It makes sense as investment support, but not as an instrument of income security.

Per-Household: Income Security, but Less Linked to Costs

PM-KISAN (and the AP top-up structure) is per household: every farmer family gets the same amount, regardless of land size.

Advantages:

• Equity: Small farmers gain relatively more; large farmers gain relatively less.
• Simplicity: Only one unit (household) to track.
• Income security: It stabilises household consumption rather than just farm costs.

But a flat per-household amount is often too small to make a serious dent in cultivation costs unless it is significantly raised. It is conceptually closer to a rural basic income than to an input subsidy.

Which Is Better? It Depends on the Objective

If the objective is primarily:

• Input/cultivation support → A per-acre component makes sense, but must be capped and must include tenants.
• Income security and poverty reduction → A per-household component is more appropriate, as it directly targets the wellbeing of the family, not just farm operations.

In practice, India probably needs a hybrid architecture:

1. A base per-household income support layer (like PM-KISAN 2.0), aimed at stabilising incomes of cultivating households.
2. A per-acre, seasonal top-up layer at the state level, designed as investment support, capped to avoid highly regressive outcomes, and properly indexed to costs.

Will a Basic Income for Farmers Work? – The Way Forward

The experience so far suggests that basic income support for farmers can work in India, if designed and executed well. Such measures address an urgent need by putting money directly in the hands of those who feed the nation. However, to make these schemes more effective and fiscally sustainable in the long run, a few key lessons should guide the policy framework:

Target the Right Beneficiaries

The biggest fix needed is to include actual cultivators, not just landowners. This could involve:

• Updating land lease laws to recognize tenant-farmers;
• Issuing cultivation certificates as done (in part) by Andhra Pradesh;
• Using local vetting (Gram Panchayat lists, self-declarations) to identify sharecroppers.

Odisha’s use of multiple databases and applications (the “green forms”) to enroll sharecroppers under KALIA shows it is possible to broaden the net. Unless this is done, a significant section of needy farming households will remain excluded while absentee landlords pocket the cash – an outcome both inefficient and unfair.

A robust framework could combine land records with ground-truthing: for instance, require that if a landowner is not cultivating, the tenant’s name be submitted (with safeguards to protect owners’ rights). Community-based identification and grievance redressal can help here, as Odisha’s grievance portal for KALIA did, resolving nearly a million complaints/claims from farmers. In short, “who to pay” is the first question – and the answer must go beyond just who holds the title.

Balance Universality with Progressiveness

Policymakers should decide whether to make income support universal or targeted.

• Universal schemes (like Rythu Bandhu’s “all-landowners” approach) are easy to administer but can be wasteful at the top end.
• Highly targeted schemes (only marginal farmers, certain communities) risk higher exclusion errors and bureaucratic complexity.

A sensible middle ground might be capping the benefit for large holdings and focusing on small/marginal farmers. For example, the central PM-KISAN chose a flat per-family amount (implicitly favoring smaller farms). West Bengal’s Krishak Bandhu capped payouts at ₹10,000 (equal to 2 acres worth) even if a farmer had more land. Such caps ensure the ultra-rich farmers do not disproportionately drain the budget – akin to how many countries impose maximum subsidy limits per farm.

Another approach is a means-test or voluntary opt-out for wealthy farmers. Telangana did allow richer farmers to opt out of Rythu Bandhu (though uptake of opt-out has been limited). Going forward, the framework could consider excluding income-tax-paying affluent farmers or those with very large holdings, to conserve resources for the rest. The political appetite for exclusions may be low, but even nudging big beneficiaries to voluntarily renounce the support (as some have done publicly) can set the tone.

Ensure Timely and Convenient Payments

Timeliness is make-or-break for these schemes’ effectiveness. Governments must align the cash disbursement schedule to the agricultural calendar – delivering funds before sowing season each time.

Technological improvements can help:

• Direct transfers to bank accounts (via Aadhaar-linked DBT) have largely replaced old cheque distribution, making the process faster and more transparent.
• Real-time monitoring systems (like Telangana’s dashboards and phone-based tracking of payments) have shown success in identifying delays and fixing them.
• The use of Common Service Centres and mobile apps for farmers to check payment status (as done in some states) can increase trust and transparency.

Ultimately, a farmer income support framework should guarantee payment by a certain cutoff date each season (say, by June 1 for Kharif, by November 1 for Rabi). If funds reach after most planting is done, the core purpose is defeated. Regular, predictable payments also help farmers plan their finances better, almost like a salary. Thus, institutionalizing timely DBT – possibly via an integrated national portal collating all schemes – is crucial.

Leverage Technology but Protect Data

The ambitious scale of these schemes (tens of millions of beneficiaries) means technology will be a backbone – for registration, deduplication, and fund flow.

• Odisha’s KALIA demonstrated the power of a data-driven approach (using 20+ databases, Aadhaar, bank integration) to achieve inclusion without rampant leakage. Other states can emulate this “Unification–Verification–Exclusion” framework.
• At the same time, since large personal datasets are involved, data privacy and security must be baked in. Farmers’ data should be protected behind secure systems, used only for their benefit with consent.
• Open digital ecosystems with proper governance can allow different welfare systems (insurance, credit, advisories) to “talk” to each other and provide holistic support. Once a comprehensive farmer database is built, it can be used to deliver not just cash but also crop alerts, input coupons, or disaster relief directly.

The policy framework should thus invest in robust IT infrastructure, while making the process farmer-friendly(accessible in local languages, with offline facilitation via help centers for those who can’t navigate digital systems).

Integrate with Broader Agrarian Reforms

Cash support is not a panacea. Experts stress that it should complement, not replace, structural reforms in agriculture. Issues like lack of irrigation, inadequate storage, weak rural credit access, and market volatility cannot be solved by cash alone.

For instance, without proper marketing channels, farmers may still be forced to sell at low prices, and the extra cash might just subsidize those losses. Therefore, a comprehensive approach is needed: continue income support to alleviate immediate distress, but simultaneously invest in:

• agricultural infrastructure (irrigation projects, warehouses, rural roads),
• reform agri-markets (so farmers get better prices), and
• expand services like crop insurance and extension.

If a rupee of transfer can be leveraged – for example, by linking it to enrollment in an extension program or crop insurance – its impact multiplies. The policy framework might consider conditional cash transfers in some cases – for example, an additional bonus if the farmer adopts a water-saving practice or plants a cover crop (similar to environmental top-ups in Europe’s CAP). However, conditions should be used judiciously so as not to exclude the poorest (most schemes so far have wisely kept the base transfers unconditional, which is important for uptake and simplicity).

Sustainable Financing and Rationalizing Subsidies

Can India afford large-scale farmer income support permanently?

It’s worth noting that these programs are, in effect, replacing or repurposing existing subsidy expenditures.

• Telangana, for instance, spends about 7% of its state budget on Rythu Bandhu, which is significant but arguably manageable (around 0.7% of GSDP).
• The central PM-KISAN at ₹6,000/year for ~11 crore farmers comes to ₹66,000 crore annually – comparable to, or less than, the budget for fertilizer subsidies or food procurement.

Some economists have proposed merging various input subsidies into a single cash income-support, which could then be higher than ₹6,000 while remaining fiscally neutral. The advantage would be reducing market distortions (e.g. overuse of urea fertilizer or free electricity leading to groundwater depletion). Instead, farmers get the money and decide their spending.

If PM-KISAN’s quantum or coverage is expanded in future, having states coordinate – as AP and Odisha did by dovetailing their schemes with the central one – will be important to avoid duplication or working at cross purposes. One idea is a centrally sponsored scheme structure: the Centre and states share the cost, and a unified database is used, with room for states to add their own top-ups.

Ultimately, the framework should be fiscally prudent by streamlining resources. As seen globally, farm subsidies and supports tend to grow into politically untouchable entitlements, so careful design at the outset (with caps, periodic reviews, and built-in sunset clauses or adjustment formulas) can prevent the program from becoming a burden that crowds out other investments.

Learning from International Models

International experience validates both the potential and pitfalls of income support in agriculture.

• The European Union’s CAP shows that while direct payments can indeed prop up farm incomes and prevent rural exodus, they must be paired with caps and conditions to avoid disproportionately enriching large farmers and harming the environment. Some countries cap the total payment per farm or require compliance with conservation practices to qualify for full subsidies – India could consider similar measures (e.g. deny payments to those who burn crop stubble or violate environmental norms).
• At the same time, the social safety net aspect of these payments is invaluable. In the EU, many small farmers say that without basic income support, they would not survive as full-time farmers given slim profit margins.

That holds true in India as well, where surveys found that even if Minimum Support Prices were raised, a majority of marginal farmers would still prefer to keep receiving income support, since they often can’t sell all their produce at MSP rates.

Outside of agriculture, global trials of Universal Basic Income (UBI) or unconditional cash transfers (from Finland to Kenya to Namibia) have shown improved well-being among recipients, though funding such programs at a universal scale is challenging. In India’s context, focusing on farmers (a clearly defined beneficiary group) might be a more feasible starting point for a partial basic income. The political consensus in favor of supporting “annadatas” (food providers) means farmer income schemes have gained cross-party acceptance. The success of state schemes in Telangana and Odisha even nudged previously skeptical policymakers to adopt the idea nationally via PM-KISAN. Going forward, integrating these schemes into a cohesive national policy – learning from each other and from global best practices – could enhance their impact.

Conclusion

Direct income support to agricultural households has emerged as a promising tool in India’s policy toolkit. The experience since 2018 shows that when farmers are given even a modest basic income, it can increase their economic security, reduce their dependence on usurious credit, and help them invest in their livelihood. Crucially, it also acknowledges the farmer’s hard work in a tangible way, which has intangible benefits for morale in the agrarian community.

That said, such schemes are not a silver bullet for all agrarian problems. They work best as part of a broader strategy – alongside measures to improve crop yields, market access, tenancy security, and climate resilience. If India can refine the framework to:

• target genuine cultivators (including tenants),
• ensure equitable and timely distribution,
• design a rational, indexed quantum of support,
• balance per-household income security with per-acre cultivation support, and
• maintain fiscal balance through subsidy rationalization,

then a farmer basic income support program could well be a game-changer for rural poverty alleviation and farm sector revival.

In a country of nearly 100 million agricultural households, the impact of even an extra few thousand rupees per family per year – when delivered efficiently and fairly – is not just an economic boost, but a message that society values its farmers. The early research and outcomes are encouraging, but getting the design right will determine how far this policy can go in securing the future of Indian agriculture.