Editorial Notes

[Editorial Notes] Direct Benefit Transfer: When those who sow, don’t reap the dividend

Making Minimum Support Price (MSP) or PM-Kisan payments into farmers’ accounts is problematic when the tillers aren’t the landowners.
By IASToppers
March 14, 2020


  • Introduction
  • What problems it poses?
  • Present Scenario
  • Concerns
  • Controversy
  • Ground implementation of PM-Kisan
  • Need for real data of landless farmers
  • Conclusion

Direct Benefit Transfer: When those who sow, don’t reap the dividend

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There are many farmers in India with special focus to Punjab region who don’t own the land but practice farming by taking it on rent at an annual rate of Rs 55,000-60,000 per acre. But despite being regular farmers of wheat and paddy, there is no record in any official document of these landless farmers cultivating others’ land or of the owner having given it out on lease.

What problems it poses?

  • Not being either the owner or a registered tenant farmer means these farmers cannot access any crop credit from the local primary agricultural cooperative society.
  • They can’t be benefited from the Punjab government’s loan waiver or the Centre’s Pradhan Mantri Kisan Samman Nidhi (PM-Kisan) income support schemes.
  • The “scale of finance”, which is used by banks to fix loan limits per acre for various crops, simply does not apply in these cases.
  • Even at the time of sale at the agriculture produce market committee (APMC) mandis, the ‘J form’, which gives details of the crop, quantity and price, mentions only the name of the landowner.

Present Scenario:

  • The central government’s plans to make minimum support price (MSP) payments directly into the bank accounts of farmers, from the ensuing wheat procurement season starting April is of no significance to these farmers.
  • Since, there is no government record of them one tilling the land and growing the crops being sold.
  • It arises the need for a Girdawari (survey of land) before implementing such reforms, and enter the name of the actual kashtkar (cultivator) along with the zamindar (owner).
  • The current system, where the Food Corporation of India and state agencies undertake grain procurement through arhatiyas (commission agents) in APMC mandis, works better for landless tenant farmers.
  • The payment is made into the arhatiya’s account and that money also comes to them. The arhatiya is the last resort for receiving loans to raise the crops.


  • Then landless tenants represent an estimated 30-35% of Punjab’s farmers who cultivate land belonging to others that include government employees, NRIs and permanent urban residents within and outside the state.
  • Currently, confusion seemingly reigns over the plans to implement direct benefit transfer (DBT) in MSP payments, starting with the wheat crop that will arrive in the mandis from April.
  • The Punjab government, at the nudging of the Centre, has made it compulsory for arhatiyas to provide bank and Aadhaar numbers of all their farmers.
  • This data is to be linked to the Centre’s Public Financial Management System (PFMS) network, which will enable direct payment of MSP money into the accounts of farmers rather than that of the arhatiyas.
  • Punjab has some 48,000 of these mandi intermediaries, of which 28,000-odd are active and each dealing with anywhere from 20 to 200 farmers.


  • The move has predictably met with opposition from the arhatiyas, a significant section of which has announced holding of state-wide protests from March 1.
  • In 2018-19 alone, 169.16 lakh tonnes (LT) of paddy and 129.12 LT of wheat got procured from Punjab.
  • These, at their respective MSPs of Rs 1,770 and Rs 1,840 per quintal, would have been worth almost Rs 53,700 crore.
  • At 2.5%, the commission payments over and above this to the arhatiyas would have been around Rs 1,342.5 crore.
  • Over a third of our farmers are landless tenants.
  • The president of the Punjab Arhatiya Association has raised concerns that if MSP payment is transferred directly into bank accounts, only the landowners will benefit. That defeats the very purpose of ensuring MSP for the actual tiller.
  • “Arhatiyas and farmers will both see to it that the tractor trolleys loaded with wheat this time will be parked on the National Highways, instead of being transported to APMC mandis,” he warns.

Ground implementation of PM-Kisan:

  • Under PM-Kisan, there are 22.40 lakh farmers in Punjab receiving annual income support of Rs 6,000 each.
  • But this list, concedes a senior state agriculture department official, includes only landowning farmers.
  • For collecting the details of landless farmers, the government is, therefore, relying on the arhatiyas.
  • The latter are, of course, least inclined to provide that information — save under the threat of not being paid their 2.5% commission fee on the MSP value of procurement.

Need for real data of landless farmers:

  • In the backdrop of the Punjab government having to ask arhatiyas, the real data of landless farmers, the need for conducting a single census on landless farmers in the state arises.
  • The state government maintains that it is committed to cover every farmer, including landless tenants, under the PFMS network.
  • The government is at the process of preparing a pro forma for such farmers to be registered with the APMCs concerned.
  • The pro forma, to be issued soon, will carry their bank account numbers with IFSC codes, Aadhaar ID numbers and the quantity of crop sold at the mandis.


The genuine needs and concerns of the landless tenants and cultivators must be taken care of. The Central and state government should frame a policy in unison that is inclusive to the landless farmers as well, such that they too are benefited from the existing benefit schemes of the government.

Mains 2020 Editorial Notes

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