Modi’s Rs 6,000 PM-KISAN gift to small farmers may cut poverty by 20%, Kirit Parikh explains

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The Rs 6,000 income support per year per household promised by Narendra Modi government for small farmers under PM-KISAN scheme may have been mocked Rahul Gandhi as petty, but it has the potential to reduce poverty in many states by as much as up to 20%.

Former Planning Commission member Kirit Parikh wrote in The Indian Express that adding this amount to the monthly consumption expenditure will elevate several households above the poverty line in various states. Further, even those households which still remain below the poverty line would see a reduction in the gap, he wrote.

Kirit Parikh has estimated a modified monthly per capita consumption expenditure (MPCE) by adding the amount to the inflation-adjusted MPCE data from national sample survey (NSS) of 2011-12.

Comparing this modified MPCE with the poverty line in different states can assess how many people will cross the poverty line, Kirit Parikh, who is now chairman of Integrated Research and Action for Development, wrote. For example, in Bihar, 10% of people will be lifted above poverty line, he wrote.

The PM-KISAN scheme was announced by the central government in the interim budget 2019. Under it, the government will pay Rs 6,000 per year per household to farmers who own less than two hectares of land.

Taking the example of Bihar, Parikh wrote: “Before the transfer, 40 per cent of people’s expenditure in Bihar was below the poverty line. After the transfer, only 30 per cent of people in the state remained below the poverty line.”

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Repeating the process for other states and union territories shows a 10 per cent reduction in poverty. The fall would be greater if the UPA government’s food security scheme benefits were also taken into consideration, he added.

Moreover, the scheme PM-KISAN is also likely to provide a cushion to poor household against any unexpected financial need such as due to accident and illness. There is still a long way ahead for India in eliminating poverty in the country and this scheme can be regarded as one more step towards it.

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