Universal Basic Income (UBI) – A Silver Bullet To End Agrarian Distress? Part 2 of 2

Universal Basic Income (UBI)

In the first part of this two-part blog series, we covered the basics of Universal Basic Income (UBI) along with certain pro-farmer Indian welfare schemes inspired therefrom. Further, we posed a question as to whether UBI can indeed be the magical cure to end the agrarian crisis in India. In this part, we will delve further into this subject and explore better alternatives to the same.

In yet another derivative of the UBI model, the Central Govt. recently launched the Pradhan Mantri Kisan Samman Nidhi scheme (PM-KISAN).  Under this scheme, a sum of Rs. 6,000 will be transferred via Direct Bank Transfer (DBT) annually in three installments of Rs. 2,000/- each to small and marginal farmers having an agricultural land holding of less than 2 hectares.

The primary focus of this scheme is direct cash assistance and direct reach to Smallholder Farmers (SHFs) at least possible cost. However, cash assistance in isolation is not sufficient to combat the multi-faceted concerns of the Indian farming community, many of which are landless farmers who cultivate the land on lease basis from land-owning farmers. One of the key aspects is a lack of appropriate market and its direct access to farmers because of a long chain of intermediaries due to inefficient supply chain rooted in dis-aggregated production and insufficient infrastructure. The exploits of Information Communication Technology (ICT) and efficient e-market mechanisms for efficient trading of commodities has just begun. Direct income transfer like in PM-KISAN is a welcome step in the right direction. The government has taken cognizance to this aspect and is doing many more things to enhance farmer realisations with the least number of intermediaries in between.

The need of the hour is to look beyond cash assistance and formulate a policy framework that enables farmers to directly connect with their buyers and demand their own price. A classic example of such an ecosystem is the Karnataka Government’s Unified Market Platform (UMP).

The UMP, which is an initiative of Rashtriya e Market Services Pvt. Ltd. (ReMS) – a Joint Venture Company of NeML and the Karnataka State Govt., has not only encouraged Traders and Large Institutional Buyers from other States to trade on its platform, but has also delivered tangible value on the ground by enhancing farmers’ income by over 38%.

Enhancing procurement and sale efficiencies of government procurement and sales using new market tools like hedging using commodity Futures & Options at Commodity Exchanges like NCDEX, deepening use of e-markets like that of NeML, ReMS and FFresh are likely to enhance price realisations for Indian farmers as they can choose from various markets in a transparent and verifiable market ecosystem.

To sum it up, cash assistance schemes like UBI is a good first step and many more need to be taken to enhance the income of Smallholder Farmers (SHFs).

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