Taking account of the aggravating agrarian crisis in India, the government is considering to replace agricultural subsidies with cash transfers to farmers for different agricultural inputs.

Since 70% of Indian economy is directly or indirectly dependent on agriculture, the governments have introduced a number of schemes and subsidy programs to off-burden the farmers. Government-powered subsidies for land, fertilizers, equipment cost and many other agricultural can be availed by farmers. Considering the discontent among farmers, the government is planning to draw up corrective measures before federal polls by replacing subsidies with cash transfers to farmers for various agricultural inputs.

This means, the existing club of subsidies can possibly be replayed by cash pay outs from the government, as per probable provisions made in the upcoming interim budget. The upper limit for cash pay outs to farmers will be set to Rs 70,000 crore in the current fiscal year, which overlaps the budgeted Rs 70,100 crore for farm subsidies in year ending March 31. Hence, the plan will not impact or create deficit in the country’s expenditure and will not aggravate the nation’s fiscal deficit for the current year ending.

Regardless of the implementation of cash give outs to farmers or not, the government is bound to a fiscal deficit of 3.3% of gross domestic product (GDP). So to realise the ideas of social and agricultural welfare, the Centre’s short pool of savings is unlikely to help and it may seek the Reserve Bank of India’s savings for additional funds, using them as interim dividend. For now, the government’s call is to peg down a plan that will secure the rural vote bank in its favour. At the end, Finance Minister Arun Jaitley said that “it all depends on what the existing situations are”.