Agriculture: Government Decides to Transfer Production Incentive to Farmer.

The government after much deliberation decided to transfer Rs 4.50 a quintal directly into the bank accounts of sugarcane growers. The government called this a production incentive.

An incentive directly transferred into the bank accounts of growers to boost production will not attract the strictures from the World Trade Organisation for distorting the market. It also pleases the sugar mills which must pay that much less to growers in the 2015-16 season.

The Centre plans to pay the difference between the minimum support price (MSP) of cotton and the prevailing average market rate, and call it differential price payment.

There are also reports that the Uttar Pradesh government has transferred Rs 28.60 per quintal into the sugarcane grower's bank accounts for the 2014-15 crushing season, totalling Rs 2,127.25 crore. And in the 2015-16 rabi season Uttar Pradesh government plans to directly transfer a subsidy of Rs 1,400 per quintal for certified wheat seeds. The condition is the seeds have to be bought from designated agencies at market prices.

All these point towards the growing realisation among the political class on the need for direct transfer of subsidies, incentives and other support to farmers, instead of routing them through companies or state agencies. Subsidy leakage is turning the argument in favour of targeted transfer from the government to beneficiaries, which in this case are farmers.

The success of cash transfers for cooking gas, food and the rural jobs scheme also seem to have convinced the government on adopting the mechanism for agriculture.

Member of NITI Aayog, Ramesh Chand said "Direct transfer is the most efficient way of distributing subsides and should be tried as and when it can be done, but it should be linked to the volume of inputs."

According to sources a big thrust of the new National Policy for Farmers could be on how to boost incomes through direct transfer of subsidies and incentives. The 2014-15 Economic Survey showed Rs 378,000 crore, or 4.24 per cent of the GDP, is spent on subsidies.

In agriculture, apart from fertilisers, other inputs like seeds, machinery, equipment, irrigation systems and horticulture equipment are subsidised by the government.

Alagh said "In sugarcane and cotton, much of the ground-level work is organised and in the hands of cooperatives, where the person who has the operational holding of land is well identified. But in crops where the ownership holding is different from the operational holding, it might be difficult."

Member of the Uttar Pradesh Planning Commission and president of the Kisan Jagriti Manch, Sudhir Panwar said cash transfers were good overall, but in fertilizers these should done cautiously because they limited the total quantum of subsidies.