Two quick fixes to help make Raithu Bandhu better focussed by targeting the right beneficiaries.
JM Keynes, one of the influential economists the world has ever seen has once said, “dig holes and fill them up,” if that’s the only way of providing stimulus to the economy.
The welfare schemes of TRS government in Telangana have taken more than a leaf from Keynes! Raithu Bandhu is one such measure which has seen one of the largest cash transfers India has ever seen. In its current avatar, anyone who has an agricultural landholding in Telangana gets two instalments of Rs. 5,000 per acre per year so that the burden of input costs reduces. No matter the political rhetoric, this scheme did help increase the net sown area, gross cropped area and thereby overall agricultural production in Telangana. The Telangana state government has spent more than Rs. 50,000 Crores in the last eight seasons (4 years) on this flagship project with the latest instalment of approx. Rs. 7,500 Crores for 150 lakh acres of agricultural land.
However, in spite the mammoth success of this program, two quick fixes perhaps could save the exchequer and the tax payer a lot of money without largely impacting the overall objectives of this program.
Firstly, those land holdings that are more than 10 acres could be taken off the list of beneficiaries, thereby saving 14% of the project cost or roughly Rs. 2,000 crores per annum. Had this been implemented from day 1 of this scheme, almost Rs. 7,000 crores of government’s money could have been used for a better cause.
As can be seen from the graphic above, 11.5% of the area operated is of medium size (9.89 acres to 24.77 acres) and 2.3% of the area operated is of large size (24.78 acres and above). Together, these land holdings of 10 acres or more constitute 13.8% of the total agricultural land. Thereby, 13.8% of the Raithu Bandhu money is going to farmers who own 10 acres or more.
One argument used against excluding these farmers who own 10 acres or more is by saying every farmer needs money for bearing the input costs of farming. However, this brings us to the bigger question, is the cash transfer happening only when cropping happens or for any farm land whether being used or left fallow? Now to the second fix:
Secondly, by making sure Raithu Bandhu scheme is only applicable for the land if the farmer cultivates the land, 30% of the project cost or roughly Rs. 4,500 crores per annum can be saved. Had this been implemented from day 1 of this scheme, almost Rs. 15,000 crores of government’s money could have been used for a better cause.
According to Telangana Socio Economic Outlook 2022, the gross cropped area in Telangana is 210 lakh acres, while the government disbursal of monies happens for 300 lakh crore acres (150 lakh acres * two instalments – vanakalam/kharif and yasangi/rabi). Thereby, 90 lakh crore acres of untilled land or 30% of the total payout is being given just a cash transfer without serving the declared purpose.
To sum up, every year Rs. 6,500 crores of tax payer’s money perhaps can be better spent!