Agriculture distress would be the main agenda in the upcoming interim budget. With this background, Domestic ratings agency, India Ratings on Tuesday expressed hopes that the Centre might announce basic income support scheme in Budget 2019, which is better than any farm loan waivers.
However, if announced this income support scheme for the poor might cost the Centre a bomb i.e. Rs 1.5 trillion per annum or 0.7 percent of the gross domestic product (GDP) combined for the Federal and state government.
The main opposition Congress has already promised to come out with an income support scheme if voted to power in 2019 general elections. The experts at the agency told media persons, “The roll-out of income support as a core centrally sponsored scheme is a better option than debt waivers,”.
Farmer woes and agriculture distress has been prevailing for last many decades. To tackle these, several governments have been coming up with several schemes and ways like rise in minimum spending price (MSP), increase in public spending in rural areas, rural employment guarantee scheme and providing direct income support.
With the country going in for general election this summer, agency expects that both the Centre and the state budgets would focus on the ways to address the farmer distress.
For instance, as shown in Indian Express, if the income support is announced say Rs 8,000 per acre per annum for marginal and small farmers, a marginal farmer and a small farmer would receive Rs 7,515 and Rs 27,942 per annum on average, respectively.
"The levels are significantly lower than the amount conceptualized under the universal basic income scheme for the poor proposed in the Economic Survey 2016-17. The support would cost the Centre Rs 14.68 trillion or (0.70 percent of GDP)," it said.
As per the experts, if the scheme is rolled out as a core centrally-sponsored scheme, the bearing cost of the scheme would be divided between the central and states, with the former being responsible for 0.43 of GDP as its cost, while the latter shelving out 0.27 percent of GDP.
But either ways it would not be easy, as it would directly put states finances under pressure, particularly Andhra Pradesh, Bihar, Chhattisgarh, Jharkhand, MP, Odisha, Telangana and Uttar Pradesh as they have already rolled out farm loan waivers.
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